New Home Mortgage Resold - 2 1098's

[taxdoer]

I purchased a new home and my original mortgage was resold right away by my mortgage company.    I received 2 separate 1098's each listing the mortgage interest paid (the original mortgage company also included the points I paid) but both showing the same mortgage origination date.  Turbo tax makes it look like I took out 2 loans when I enter the 2 1098's since it forces me to enter the amount of the loans.  It's not really accurate to classify the resold mortgage as "refinance" either.  

I'm stuck since there is no option to list the resold mortgage as a "transferred" or resold mortgage and just enter the 1098 without entering the full amount of the mortgage again.  How do I properly enter both 1098's without it seeming like 2 separate loans for close to the same amount (the purchase price of our new home)?  

[NCperson]

I don't think that is going to matter.  What matters is that TT correctly itemized the deduction for the interest on both 1098's.

I did test that on my own return and it correctly itemized both 1098s.  I also stated the balance on the 1st 1098 was $0 at 12/31/18 and also stated it was the same as the 2nd 1098 at 12/31/18. It didn't matter (as long as it was less than $750,000)

did you state that the balance was $0 for the 1st servicer at 12/31/18? would that make you more comfortable that there is only 1 mortgage?

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[PaulaM]

NCperson is correct. It won't matter in TurboTax. It is very common for a mortgager to sell their loan portfolios to another loan servicer. Enter as described above, and the correct total will flow to the Schedule A as mortgage interest on line 8a. The rest flows to worksheets, that won't be sent to the IRS.

[Indnanna]

So I had the same situation, entered the 1098s correctly (according to the other response on this question) but then it didn't add my mortgage interest into my deductions.  It was a refinance in August 2018.  Shouldn't I still be able to deduct the mortgage interest from the loan I refinanced at least?  How do I enter this correctly to reflect that?

[taxdoer]

Thanks for your thoughths NC . . . yes I ended up stating that the balance was $0 on 12/31/18 for the 1st servicer and just treated the 2nd servicer as if it were a re-finance.  TT did correctly itemize the deduction for interest on both 1098's. 

Thanks again for commenting.  

[doT]

The problem with TurboTax treating it as 2 different mortgages is that when I calculate my state taxes (CA), it doubles up the mortgage and pushes it above the mortgage limit for interest deduction.  Right now, I'm just putting $0 for the balance of the first loan and the full loan amount for the transferred loan.  Does that seem right? Anybody have a different way of doing this?

[NCperson]

I assume you are describing a mortgage servicing transfer, is so. I’m the spirit of the law, combine the two forms

If you sold one home and bought another, then the mortgages forms need to remain separate . If asked, I will post the IRS reference

[doT]

Yea, it was a mortgage that was transferred to a different lender on the day of the sale. Your method may be the cleanest way to do it in the software. I’ll do that. Thanks

[californiacyclist]

Greeting doT... I have the same problem with two 1098's for two different servicing agents who each serviced the loan for partial time periods during the year.  In spite of what is written in this thread, TurboTax will not accept a "zero" value in box 2 of the form.  I've contacted Intuit/TurboTax for a resolution, but it appears they don't know how to handle this matter either.  Stay tuned...

[MarilynG1]

I tested entering two 1098s in TurboTax Online, and was able to use $0 for Outstanding Loan Balance as of 1/1/19 (Box 2) on the first 1098, with the Original Loan Amount in Box 2 on the second 1098. 

Be sure to indicate that both 1098s are  for 'the original loan used to buy..' and that you did not refinance, take a home equity loan, etc.

Click the link for a detailed response to this issue.