Mortgage loan transferred within 10 days, got 2 separate Form 1098. How are points deductions calculated

[smokeydokey]

Can someone walk me through how to input the two Form 1098s I got? I took out a mortgage loan in 2023 , paid $10700 in points, and in 10 days the loan got transferred to another lender. I got 2 Form 1098s as a result. All my points paid are shown in the 1st 1098 and none in the second 1098.

1) When entering the 1st original Form 1098 from original lender, do I check the box "This loan was paid off or refinanced with a different lender in 2023" even though I technically didnt pay it off or refinanced? I just worry that if I check off this box that my points will no longer be taken out of the future tax refunds. 

 2) On the 1st Form1098 from original lender, If I check off that box "This loan was paid off or refinanced with a different lender in 2023", my deductible point is $10700. But if I dont check it off, it becomes $167. But either way it doesnt affect my refund amount. Which do I do? 

[PatriciaV]

Since the note was sold, you didn't "refinance" the loan. Instead, enter the points from the first 1098 on the second 1098. Indicate that the first 1098 is not the "most recent." This will avoid problems with your total mortgage balance exceeding the limit.

If you are unable to itemize your deductions, there's no difference between reporting all the points this year and spreading the points over several years. Either way, you are getting the standard deduction -- which is why your refund doesn't change.

[smokeydokey]

Hello, 

hm my points is on the original 1st Form 1098 though. Why would I report the points on the 2nd Form 1098 with the transferred company if it doesn’t show on the actual Form? Aren’t I supposed to fill in the info exactly as I see it? 

also, I’m actually doing an itemized deduction and it shows all the points I paid as deductible amount. But then for some reason it didn’t change my refund amount at all. Why is that? 

thanks for your help! 

[nrp13]

How did you resolve this issue? 

[DianeW777]

It depends.  If you have the same situation where the mortgage was sold you must follow the instruction provided by @PatriciaV so that TurboTax carries the full amount of the points to Schedule A. See the information posted here for your convenience.

• Enter the points from the first 1098 on the second 1098. Indicate that the first 1098 is not the 'most recent'. This will avoid problems with your total mortgage balance exceeding the limit (assuming it is at or below $750,000 ($1 million before 2018).

Review the tax return before filing to be sure all are included if you itemize deductions. 

• TurboTax Desktop - Switch to Forms and review your Schedule A
• TurboTax Online - Can I print a copy of my return in TurboTax Online before I file it?

The refund changes with various income and deductions. If all of your information for itemized deductions is shown you can be confident the return is accurate..

@smokeydokey 

@nrp13