What do I enter for "Was this loan paid off or refinanced with a different lender in 2018?" if I had a same lender refinance on my mortgage?

[aj498]

I refinanced my mortgage in 2018 with the same lender.  I do have two 1098's, and I understand that I need to enter both.  However, when doing the entry for the original 1098, what do I enter when it asks "Was this loan paid off or refinanced with a different lender in 2018?".  The loan was not paid off, it was refinanced with the same lender, so I'm not sure how to correctly answer the question.

[AnnetteB]

You would answer Yes to the question that the loan was paid off or refinanced with a different lender. 

Technically, your original loan with your lender was paid off since you are no longer paying on that loan with its original terms.  Now you have a new loan with new terms, although with the same lender, for your refinanced loan. 

[drmorello]

So, I have a complication as my 2013 loan had points that I've been amortizing but since I refinanced with the same lender in 2019 the IRS publication indicates that I must take remaining points balance and amortize with my new loan. If I check the box "Check this box if you refinanced your loan with a different lender, paid off this loan, or sold the property" then TurboTax will apply all remaining points as a deduction this year which seems contradictory. What is the correct way to handle the remaining points from the refinanced loan since I did refinance and get a new loan with the same lender??

[AnnetteB6]

After further research, I believe the previous answer shown above was incorrect.  

According to the IRS Publication 936, the correct way to handle the remaining point from the old loan when you refinance with the same lender is to continue amortization of the points through the life of the new loan. 

Here is the exact wording from that document: 

Mortgage ending early.

If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. However, if you refinance the mortgage with the same lender, you can't deduct any remaining balance of spread points. Instead, deduct the remaining balance over the term of the new loan. A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event.

@drmorello

[Louie G]

How is the old worksheet with old loan points closed out (for our rental property)  ?

Our worksheet 'Refi 2008' still had $1100 that we wanted to close out and add to our new refi amounts, same lender.

What I did was put the refi date as the Date Sold - Line 20 under Dispositions - old asset page-

The system gave an allocated amount of Amortization for the year, and the Asset Life History shows that there will be no more amortization after this year, and there is a "S" in the Depreciation Report, Code Column.

I then took the balance not amortized and the new refi amounts and created a new asset page.

All looks good...

[Louie G]

What I did was put the refi date as the Date Sold - Line 20 under Dispositions - old asset page-

The system gave an allocated amount of Amortization for the year, and the Asset Life History shows that there will be no more amortization after this year, and there is a "S" in the Depreciation Report, Code Column.

I then took the balance not amortized and the new refi amounts and created a new asset page.

All looks good...