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New Member

I refinanced twice and have three 1098 forms

I refinanced twice in 2019 and received three 1098 forms. When entering the two new loans’ 1098 forms, TT says to leave box 2 (outstanding mortgage principal) empty, as the loans were originated after Jan 1, 2019. If I do this, the main page of the 1098 deductions where it shows the summary of all three, has a “needs attention” next to those two 1098. If I go in and add the amount that is in the 1098, however, the “needs attention” goes away. Should I move forward and leave the “needs attention” there or should I fill in those boxes with the outstanding mortgage principal?

 

Also, in this scenario, which of the three 1098 would I select the option that TT asks for to be the original loan used to the purchase the home? The most recent refinance? Or the original one before any refinancing?

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Expert Alumni

I refinanced twice and have three 1098 forms

For the two loans that originated in 2019 the amount for Box 2 is $0. With the two new loans there was not a principal balance on 1/1/2019 which is the information in box 2 should be.

 

If you refinanced your house and took out additional money the full amount of the interest is still tax-deductible as long as the funds were used to improve the house.  If any additional money was withdrawn and used to pay other debt or for other personal reasons then the interest paid on that portion of the loan is not tax-deductible.

 

Link to Deducting Mortgage Interest

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New Member

I refinanced twice and have three 1098 forms

Thanks Diane, however on my 1098 from my lender, they did list an amount in box 2, and if I don’t enter that into TurboTax, it has a “needs attention” next to each of the 1098 after I am done entering them. 

At the bottom of the 1098 from my lender, it says “Box 2. Shows the outstanding principal on the mortgage as of January 1, 2019. If the mortgage originated in 2019, shows the mortgage principal as of the date of origination.”


Should I ignore TurboTax’s suggestion of leaving it blank, and put the values in, so that the software doesn’t tell me “needs attention” for leaving them blank?

 

Neither of these were cash out refinances, and both were with the same lender. 

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Expert Alumni

I refinanced twice and have three 1098 forms

No, you do not want to put a value in box 2 other than $0 because otherwise, the software may limit the amount of mortgage interest that you can deduct on your return.

 

If you have more than $750,000 in mortgage debt the interest on the amount of debt over that is not deductible.  By putting information into box 2 of the amount of the loans the program will add them all together which may limit your deduction. 

 

Since you were just refinancing the refinanced loan did not have balance for the loan at the beginning of 2019.

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