Two 1098s with Different Lenders with Selling and buying a new home

[emilyamarcus]

I have two 1098 forms with selling a house with one lender and buying a house with a new lender in 2020. Do I put both 1098s/lenders in the home loan deduction center with the actual amounts listed in all the boxes? Or do I calculate and put it all into one?

For example (what I have right now inputted):

Lender A (of sold house): Put full amount for mortgage interest, outstanding principal (~$160k), origination date, mortgage insurance premiums, and real estate taxes.

Lender B (of newly purchased house): Put full amount of mortgage interest, outstanding principal (~$275k), origination date, mortgage insurance premiums

And then submit both?

OR do I need to do calculations and adjust the outstanding principal amounts on both lender A and lender B forms in TurboTax? Since they are with two different lenders, I do not know if I should do calculations like the "help guide" says on TurboTax since I don't know which one to put then.

Thanks!

[JotikaT2]

You can enter both 1098 forms.  But you should enter zero in the ending balance for the home loan that is no longer in existence (sold) by the end of the year.

You can enter your 1098 Forms into the program in the federal section of the program.

1. Select Deductions & Credits
2. Select Mortgage Interest and Refinancing (Form 1098) 
3. At the bottom of the next page, select Add another 1098
4. Be sure to answer the questions carefully for each 1098

Be sure that you have entered $0 for the loan that was paid off in Box 2 - Outstanding mortgage principal on the screen titled Let's get the details from your Home loan 1098.

You will also want to select that the loan is no longer there at the end of the year is marked as paid off during the year.

Please see the link below for more information on the mortgage interest deduction.

Deducting Home Mortgage Interest

You will enter your second loan exactly as it is reported on your Form 1098.

[emilyamarcus]

Thanks for responding. My TurboTax looks entirely different and does not have that check-box option. It also won't let me have a $0.00 outstanding principal amount. Is something going on with TurboTax itself or is it user error? What should I do if there isn't an option at all for "the loan is no longer there at the end of the year is marked as paid off during the year"?

[ReneeM7122]

When you have two 1098 forms with selling a house with one lender and buying a house with a new lender in 2020 then yes, you enter both 1098s one at a time.  After going through the steps with the first one, you can add a lender when you get to the Mortgage deduction summary screen.  You would NOT enter them together as one unless it is a refinance.

Here is a TurboTax FAQ about deducting Mortgage interest.

[emilyamarcus]

I am still confused. Do I put $0 for the amount on the first 1098 that is no longer valid? It says a $0 amount is not valid. It is also not the amount on the 1098, so how does that work? There is no where to mark that the loan has been paid off either. The second one (the new one) I will input as is, but I do not know how to go about the first one. Is this an issue with the TurboTax Premier edition I have that there is no quark on for if the loan has been paid off or not? 

[ReneeM7122]

You should enter it just as JokitaT2 explained above.  Here is her explanation:

#6113934

You can enter both 1098 forms.  But you should enter zero in the ending balance for the home loan that is no longer in existence (sold) by the end of the year.

You can enter your 1098 Forms into the program in the federal section of the program.

1. Select Deductions & Credits
2. Select Mortgage Interest and Refinancing (Form 1098) 
3. At the bottom of the next page, select Add another 1098
4. Be sure to answer the questions carefully for each 1098

Be sure that you have entered $0 for the loan that was paid off in Box 2 - Outstanding mortgage principal on the screen titled Let's get the details from your Home loan 1098.

You will also want to select that the loan is no longer there at the end of the year is marked as paid off during the year.

Please see the link below for more information on the mortgage interest deduction.

Deducting Home Mortgage Interest

You will enter your second loan exactly as it is reported on your Form 1098.

[emilyamarcus]

I understand that is how I *should* fill it out, however, it is not letting me. If you look at previous responses you an see my TurboTax premier version looks entirely different and does not let me enter $0.00 for Box 2 - Outstanding Mortgage Principal, nor is there another screen to for "loan paid off or refinanced in 2020". I updated my TurboTax and no updates to this section. Is this something that should be concerning or that I am filling out incorrectly?? Thanks!

[JohnB5677]

This may be a work around if you have multiple 1098s.  I suggest you enter each one separately.

If a Mortgage is paid off, or re-financed you should:

• Enter $1 in Box 2 Outstanding Mortgage principal for the Refinanced / Paid off mortgage
• Every 1098 should be posted.
• The final 1098 for that property will have the full loan amount as reflected in Box 2.
• If you have multiple properties, you should follow this procedure for each property.

This will properly record every 1098, and avoid any issue with mortgage limitations.

When you have more than one Form 1098 with the refinance info and both show the same balance of the mortgage, TurboTax adds the amounts together. And that may lead to a limitation of the deduction, because the balance is then overstated. To avoid this, make sure that you're not reporting the same mortgage balance twice.

If your combined home debt is under $750,000 ($750,000 for married filing jointly and $375,000 for married filing separately), there's nothing new for you to do in 2020. Enter each 1098 as you normally would.

[ediehl50]

I also have two 1098 forms one for I sold my home and another for the new home. The first 1098 form in which I sold the home shows a balance in Box 2 which I paid off when I got new loan for new home from another lender. My question is how do I list the 1st 1098 on the home I sold? Do I mark Primary Home, Second Home or other?  where does it show I sold it?

[zomboo]

You should first enter the1098 for the house sold.  While going through the questions on this 1098, there will be a box for 'Was this loan paid off or refinanced in 2023?' Check this box for the first 1098 but not for the new mortgage. Select 'Primary Home' for both 1098's. After entering both 1098's and checking done, you will get the opportunity to enter payoff details.

For the loan you paid off, the value in Box 2 is the balance on the start of the year (Dec 31, 2022 / Jan 1, 2023). For the new loan, it is the initial loan balance.

[ediehl50]

Thank you!

[DawnC]

In most cases, you can deduct your interest. How much you can deduct depends on the date of the loan, the amount of the loan, and how you use the loan proceeds.

• To get the full deduction, your mortgage debt doesn’t exceed $1 million ($500,000 if Married Filing Separately) if you got your loan between October 13, 1987, and December 15, 2017, or $750,000 ($375,000 if Married Filing Separately) if you got your loan after December 15, 2017.

If the amounts you entered for principal balance total to more than $750K, TurboTax will limit the deduction.   If you have multiple 1098s, please refer to one of the links below:

Multiple 1098s in TurboTax Online

Multiple 1098s in TurboTax Desktop