If my mortgage company sold my loan to another lender is that considered a new mortgage?

[Anonymous]

most like the payment you made after the loan was sold was in January 2020 so there is no interest deduction

so you don't need a 1098

save yourself a headache.

your choice to do 1 of following:

to the 1098 you are entering enter add the second half of the RE taxes. this is for tax return purposes only and will not cause problems with IRS

or 

don't enter any of the real estate taxes through the 1098. total them and enter in the itemized deduction worksheet 

[stevebor1]

What about Points, Box 7 on the new lender? Still very confused on the steps to take when adding 2 lenders when a loan get bought out in the same year. Please help with steps.

This is what I have. Original Lender, then the New Lender that purchased the loan.

Original Lender 1:

Box 1: $$

Box 2: $$

Box 3: 03/15/2019

Box 6: Points $$

Box 7: X

New Purchasing Lender

Box 1: $$

Box 2: $$

Box 3: 03/04/2019

Box 8: Home Address
Box 9: 1

Box 10: $$
Box 11: 5/16/2019

[AmyC]

For your situation:

Original Lender 1 

1. enter name, continue,
2. none, continue,
3. enter boxes 1,2,3,7 , continue.
4. this is a new loan, I paid points, continue,
5. loan start date, length, points paid AND loan was check the box for loan PAID OFF or REFINANCED in 2019, continue 
6. yes original loan, continue,
7. congrats tax break, continue

New Lender  -

1. enter name, continue,
2. none, continue,
3. boxes 1,2,3,11 enter information, continue,
4. no points for this loan, continue,
5. yes this is the original loan,
6. continue, congrats

@stevebor1

[benster310]

<<Your beginning Outstanding Mortgage Box 2 and Mortgage origination date Box 3 do not change when the servicing of your mortgage is transferred to another financial institution. >>

Hi Victoria, according to the IRS instructions, box 2 *should* be different.

https://www.irs.gov/pub/irs-prior/i1098--2019.pdf

Box 2.  .... .... If you acquired the mortgage in 2019, enter the outstanding mortgage principal as of the date of acquisition.

Also, there is no option to "Add another 1098", only to add another lender.

[stevebor1]

Thanks, I was going back and forth on this. Every time I visited this section, my Federal Refund would constantly fluctuate. By following your instructions, I went from -300 to +750 on my refund. Thanks again!

[stevebor1]

@AmyC actually Amy, I went to Review and it says I need to check an entry. "Tax and Interest Deduction Worksheet - Limited interest and points must be entered"

Limit Int/Points on 1090 _________

I currently have: (auto-filled)

Does your mortgage interest need to be limited: YES

A. 1. 23K

A. 2. ______

C. 1. 4K

C. 2. ______

5. a. 23K

5. e. 23K

7. a. 4K

7. d. 4K

btw, QuickZoom button does not work in the form.

I assume this was left over from my previous attempts at entering 2 lenders and maybe it was filled out because it calculated my mortgage to be over $750K. Maybe it should not be limited as the original loan was marked as 'paid off'.

[yz12]

I am having the same problem times 2.  I bought and sold last year and both loans were sold to new loan servicers.

• House I sold had loan servicer change earlier in the year
• House I bought loan originator sold the loan to a loan servicer

TurboTax is treating this as 4 separate loans which triggers the deduction interest limit. 

• I seem to have gotten it to stop processing in the federal as when it popped up on SmartCheck, it brought me to a worksheet (Tax&Interest Deduction Worksheet) which had a Mortgage Interest Limited Smart Worksheet.  I entered in Line A2 (Limited amount to report on Sch A) the same amount as in Line A1 (sum of mortgage interest and points on Form 1098).  This seems to have resolved the issue on Federal.
• However, in there is no such luck with the NY state return which again counts the loans as 4 separate loans and no similar solution.   I tried putting $0 as end balances on all but my actual loan on current home but no luck. The SmartCheck brings me to IT-196 (Deductible Home Mortgage Interest Worksheet) to fill in 2 lines.  1) Fair  market value of homes on date debt was last secure by home; 2) Home acquisition debt and grandfathered debt on date debt was last secured by home). I have no idea what to input. Appreciate any help.

[cltalk]

Hi @AmyC ,

Thanks for the clear instructions you gave - really appreciate it.

I'm in a similar situation to stevebor1 where my original lender had sold my loan to a new lender within the same year.  I've been stuck on this part of the tax form for a few hours now after having the federal tax due estimate go from very positive to very negative when I added the original lender info. Was very happy to find this thread.

I followed your instructions and was shown the screen below:

When I choose "No, none of these situations apply to me", my federal refund estimate goes to the positive (yay), which makes sense since answering No shows that the two mortgage I had entered are in fact the same mortgage.

However, when I click "Continue", the federal tax estimate goes back to the negative (NOOOO), almost as if the software thought I had answered Yes to the previous question.

I've tried refilling the form a couple times after that to make sure I'm in fact clicking "No", and it still hasn't worked. I'm currently using the Intuit Turbotax Home & Business software on Mac. Is there a version of this software online that does not have this bug? Or is there a new software update that can fix this? Please help.

Thanks for your time,

J

[VictoriaD75]

Try this workaround:

• In Forms view, locate and click on Tax & Int Wks on the left from the forms list
• On the form, scroll to Mortgage Interest Limited Smart Worksheet
• Click on NO to the right of the question, Does your mortgage interest need to be limited

Here is another option:

• In "Forms," find the "Tax and Interest Deduction Worksheet." 
• Scroll down to the Mortgage Interest Limited Smart Worksheet."
• If field A 1 is blank, right click it, and select "Override", then write in the total of mortgage interest paid, from all 1098 forms.
• Once field A 1 has the total of mortgage interest paid, copy that amount.
• If field A 2 is blank, right click it, and select "Override", then AGAIN  write in the total of mortgage interest paid, from all 1098 forms.

[cltalk]

I didn't get to try both options, but the first workaround solved my problem. Thanks so much @VictoriaD75 !

[DawnC]

Glad your issue was solved!   @cltalk.  

[tax23948]

@VictoriaD75 thank you so much. the workaround is the only thing that worked for me.

[DawnC]

You are welcome, glad you are situated!

[myssiemv]

I purchased a home with one lender and the understanding that it would be bought immediately by another. 

It was purchased immediately within the first couple of days - should i have expected a 1098 from the first lender?

[SusanY1]

If the loan was sold within the first few days, there would not have been enough interest to issue a 1098.  However, the interest was likely pre-paid and may show on your closing statement.  You can use that information to add the additional interest expense. 

@myssiemv