If you have two 1098's for one home because a loan was sold to another lender, it’s not the same as a refinance, but you’ll still need to enter each 1098 separately. Enter the points you paid to the first lender. Follow the steps below for this situation.
Enter the original (sold) loan first:
- Sign in to TurboTax and select Pick up where you left off or Review/Edit under Deductions & Credits.
- Select Show more next to Your Home and Start or Revisit next to Mortgage Interest and Refinancing (Form 1098).
- Answer Did you pay any home loans in 2023? and Continue.
- You can either sign in to your financial institution and import your 1098 forms, or select Change how I enter my form.
- Next, you can either upload a digital copy or Type it in myself.
- Continue through and be sure to enter this 1098 exactly as it appears*
- Answer the questions, and when you get to the Let's see if this is the most recent form for this loan screen, answer No to Is the 1098 you're working on now the most recent for your loan?.
- On the next Let's get some details about this loan screen, answer Yes to Is this the original loan you used to buy your property?
- Select Continue to be taken back to the Your 1098 info so far screen.
*When you enter the Form 1098 information for the first loan, enter the points paid, and if there is an outstanding principal balance showing in Box 2, change it to zero (since there is no mortgage outstanding on that loan at the end of the year). Where prompted, indicate that it is not the most recent 1098. Enter the points you paid in the space provided.
Then enter the 1098 for the new loan
- On the Your 1098 info so far screen, select Add another 1098 and continue through to either import or enter your information manually.
- Answer the questions accordingly and complete your 1098 info exactly as it appears on your form.
- On the Let's see if this is the most recent form for this loan screen, answer Yes to Is the 1098 you're working on now the most recent for your loan?
- On the next Let's get some details about this loan screen, answer Yes to Is this the original loan you used to buy your property? Even though the loan is with a new lender, it's still considered the original loan for this calculation.
- When you're all done, you'll see both your forms on the Your 1098 info so far screen. You can Continue through to finish and file your return.
When you enter the Form 1098 information for the second loan, indicate that it is the most recent 1098. Enter the acquisition date for this loan.
I just tested this in a Desktop version of TurboTax and the points appeared as deductible.
See this TurboTax help article for more information.
Points are fees charged for acquiring a loan. These fees may also be called loan origination fees, maximum loan charges, loan discount, or discount points. Points do not include broker fees, funding fees, processing fees, settlement fees or underwriting fees.
Points are found listed either on the Form 1098, Mortgage Interest Statement from your lender, or on the settlement statement (The HUD-1 settlement statement is the standard document used in the U.S. that itemizes services and fees charged a borrower.) given to you at the close of your real estate transaction.
Points must be amortized (spread out evenly) over the life of the loan when they apply to a:
- Loan on a second home
- Home equity loan, or
- Loan to refinance your home (if not used for home improvements)
See this TurboTax tips article for more information.
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