My mtg lender sold my loan. I was amortizing points. How do I continue that with the new lender?

[SueBee21]

I refinanced in 2020. My lender sold my loan in 2021, so I have two 1098 forms. I entered all the data for each 1098, but I'm not sure if I did so correctly, especially regarding the mortgage points I'm amortizing.  I continued to amortize the points thru the original refinance lender on TurboTax, but should I instead transfer that information to the new lender? I'm concerned about next year, and not being able to write off any more points, since I won't even have a 1098 from the original refinance lender in 2022.

[PattiF]

You should deduct all of the points that you were amortizing for the refinanced loan from 2020 for the tax year of 2021. 

The points from the first refinance are fully deductible in the year that the loan was paid.  IRS Home Mortgage Points, Topic 504, says "You may be able to deduct (in the year paid) points on a loan ... if you refinance your home mortgage.

[Mike9241]

if you paid points on the refi in 2020 that you are amortizing, just because the loan was sold to a new lender does not allow you to write off those points. you would have to refi again to do so.  in Turbotax you would have to amortize with the original lender for the period until the loan was sold. the remaining unamortized portion would transfer to the new lender/mortgage and be amortized over the remaining term. 

[SueBee21]

But I didn't pay off the first loan, it was just sold off to a different lender. That doesn't really count as paying off the loan does it?

[SueBee21]

So Mike9241, when TurboTax asks me to tell them how many points we paid, only list the the points with the new lender? And when it asks about points paid to the original refi lender, just leave that blank? The mortgage was acquired April 1, 2021.  I don't really know how to enter data for both lenders so it will calculate accurately. It automatically calculates a deduction based on the length of the loan. It won't let me override the dollar amount for each lender.

[annvp]

I have the exact same question. 

Original mortgage when we purchased the home: July 2020. $403 in Points. Amortized with 3 points deducted in 2020.

Original mortgage sold to new lender in 2021. Turbotax Premier 2021 tracks the points through the original mortgage.

There is NO user-friendly way to record the fact that the mortgage was sold, NOT paid off or refinanced.

Any help would be appreciated!

[Trvls2Much]

I have the same question - I purchased a new primary home in 2021 & paid ~$3000 points.  Then lender sold the mortgage to another mortgage processing company. TurboTax only lets me deduct ~$80 in points this year because its trying to amortize them over the life of the loan.   IRS says I can deduct them all now, TurboTax won't let me.

How do I make TurboTax work correctly in this matter?

[DawnC · Accepted solution]

On the new lender Form 1098, check the box that says ''I am spreading the points over the life of my loan''.   On the next screen, enter the same points information you entered from the original lender last year (you have a new lender, not a new loan) - - Loan date (in 2020), mortgage term (same number you used last year), and the total amount you paid in 2020 (same number you used last year).   The information needed to amortize doesn't change, so you can just stop amortizing with the old lender in the same year you start amortizing with the new lender.   

On the old lender's Form 1098, mark the box that says ''I have no points to deduct for this loan''.   All the points will be amortized with the new lender.    

Don't check the box for 'paid off' or refinanced.   TurboTax will amortize the points and give you the correct deduction.   @annvp