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Level 2
posted Mar 23, 2020 7:41:31 AM

I refinanced my mortgage and have a question on how much of the interest can be claimed as an itemized deduction.

In  October, 2019 I refinanced my mortgage.  The new mortgage amount was supposed to be only for the amount of the original mortgage balance that I still owed, but the lender's calculation of this figure was incorrect.  After the pay-off on the refinance, the original lender sent a check to me in the amount of $2943 for excess mortage payments.  Do I have to treat the $2943 as pulling out money from my refinance and therefore not  taking a deduction for the full mortgage interest amount listed on the 1098 from the refinanced lender (who in turn immediately sold it to another institution)?

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1 Replies
Expert Alumni
Mar 23, 2020 9:07:50 AM

No, you do  report your payment you received for excess mortgage payments in any manner toward your mortgage interest.  Your payment you received is simply a reimbursement for a mortgage payment you made that was not captured by the title company at the time of closing.

 

For more information on deductible mortgage interest, see IRS Publiation 936