Mortgage Interest Deduction in case of refinance in 2019

[gaudipak]

The home mortgage was refinanced in AUG 2019. I entered the figures in Form 1098 from the old mortgage and ones from the current mortgage in TurboTax. Since outstanding balance of those two 1098 shows around 600k, somehow this software indicates my total loan is over 1.2M. There is no question coming up to ask if the old mortgage is paid off in the TurboTax. I deleted several times for mortgage interest deduction section and tried it again and again but it kept showing something wrong. Please advise how to proceed. The only way which I think correct is to enter $1 outstanding balance for the old mortgage.

[DianeC958]

As you go through to add the information for your new refinanced mortgage it asks what the loan balance was as of 1/1/2019, since you refinanced the property this amount would be $0.

On the original loan you had previously for the property the amount would be the $600,000.

If you change this on the new mortgage you will not show that you had a loan for $1.2 million.

Link about Mortgage Refinance Tax Deductions.

[pugpapa75]

I'm in a similar position.  My question is that the 1098 I received for my refinance lender has the Box 2 as the Loan amount (which should be right since there is a value filled out in Box 3).  Any suggestions on how to override this and get Turbo Tax to Calculate this correctly (short of manually switching "Does the Mortgage Interest need to be limited" on the Tax and Int Worksheet?

[gaudipak]

Thanks. Then, does TurboTax allows me to move next step by entering $0 in Box2 for the new mortgage? If not, how can I move forward?

[DianeC958 · Accepted solution]

Yes, you can move forward with putting $0 in Box 2 for the new mortgage.

If for some reason the program will not allow you to move forward then put $1 for an amount inf Box 2.

Link about Mortgage Refinance Tax Deductions

@guadipak

[Tax Quest]

I have 2 1098s due to a refinance in 2019. Which one do I use? The old mortgage lender has the real estate taxes amount and the new lender 1098 does not.

[DianeC958]

You use both 1098 forms on your tax return.  You want to include the real estate taxes you paid along with any mortgage interest you paid during the year.

When you go to Deductions and Credit, Your Home, Mortgage Interest, Refinancing and Insurance, you can have more than one 1098.  On the summary screen there is a blue button, in the lower left hand corner, Add a lender,  click on this button and you can add the information from your second 1098 form.

@taxquest

[Tax Quest]

Thank you for your reply. Just to clarify, both 1098s are for the same property, just different lenders due to a refinance? I should still enter both?

[ThomasM125]

Yes, you need to enter both of them to capture the full mortgage interest paid for the year.