My 1098 form for a mortgage on question #2 "No Outstanding Mortgage Principal as of 1/1/2018" is blank. In TurboTax it will not let me go past that screen without putting in a number. Is this an error in TurboTax or did the lender make an error? The lender assumed the load mid year so I'm sure that is why they left the 1/1/2018 question blank because they didn't have the loan on that date. I'm not sure how to get past this screen in TurboTax.
If the loan was transferred to another bank or lender mid-year, then you should have two 1098's. The one from the old lender should show the 1/1/2018 balance, while the one from the new lender will show the 12/31/2018 balance. The 1/1/2018 balance is absolutely required.
Hopefully you can log on to your mortgage account online to see the payment and balance history and see what the balance was "before" you made that 1/1/2018 payment. All of your payment history "should" have carried over to the new lender since they just assumed an existing loan and you didn't refinance or anything like that.
even after entering 0.00 I still see that error and can't pass that screen (I am using MAC 2019 TT)
I have my loan service transferred in mid year and at the end of the year I had to refinance the loan totally to a new lender.
FOR TAX YEAR 2019:
If this is a new loan and the Lender left box 2 blank, enter the amount of the loan on the first day in 2019 when you acquired it.
The IRS has changed the 1098 this year and looks like it might change again for 2020.
For tax year 2019, Box 2 reports the loan balance as of 01-01-2019 HOWEVER if this is a new loan, enter the beginning balance of the loan.
According to the IRS:
"Enter the amount of outstanding principal on the mortgage as of January 1, 2019. If you originated the mortgage in 2019, enter the mortgage principal as of the date of origination. If you acquired the mortgage in 2019, enter the outstanding mortgage principal as of the date of acquisition."
I originated in 2018 for a construction loan and didn't have a principal until June/July, what should I enter? My 2019 1098 is $0 for outstanding mortgage principal.
I am assuming you mean you did not have a balance until June/July 2019.
You can enter the first loan amount (draw) you first received for box 2.
It is helpful to understand what the TurboTax program is looking for and why.
Lets say your first draw was 25,000 and by the end of the year you take three more draws of 10,000 each.
So the end of year balance is 55,000.
You enter 25,000 for box 2 (01-01-2019) and 55,000 for 12-31-2019 (or 01-01-2020).
The program will ask if you took out cash and what you did with it. As long as you say you used it on your home, the interest will be deductible. This will continue (the program will keep asking if you took cash out and what you did with it) since the loan will continue to increase until the home is completed.
The program will also average the 25,000 beginning loan balance and the 55,000 ending balance to get the yearly acquisition debt average. If the average goes over the 750,000, the interest would be limited.
From this point forward, always bring the balance forward from the previous year so that the program does not think this is new debt (therefore increasing your debt balance).
Even if/when you refinance the construction loan to a conventional mortgage, bring the balance from this loan forward to that new 1098 box 2.
Here is what the IRS has to say:
"Home under construction. You can treat a home under construction as a qualified home
for a period of up to 24 months, but only if it becomes your qualified home at the time it is
ready for occupancy. The 24-month period can start any time on or after the day construction begins."
Yes, you should be able to enter a 0 in that field, but TurboTax won't let me do it. I actually have a 0 balance for the mortgage since I paid it off this year. There appears to be a bug in that field in that it is looking for a non-zero entry. Should I just make something up or what??