I think the trickiest thing to this is that TurboTax appears to treat each 1098 as if it is a separate loan, even if the loan was simply acquired by a new lender. And the wording on the question "Have you ever pulled cash out from this loan when refinancing it?" is odd... the money is generally pulled out of the new loan, not the existing loan, when you refinance. In any case, here's how I eventually answered everything:
1098 #1 (Original Loan):
1: Was this loan paid off or refinanced with a different lender in 2019? [Yes]
2: Is this loan a home equity line of credit or a loan you've ever refinanced? [Yes]
3: Have you ever pulled cash out from this loan when refinancing it? [No. I pulled cash out of the NEW loan, not this loan. This loan was replaced with the new loan.]
4: Have you used the money from this loan exclusively on this home? [Yes]
5: How much interest you can deduct this year? (based on how much cash you pulled) [All of it.]
1098 #2 (The Refinance):
1: Was this loan paid off or refinanced with a different lender in 2019? [No. It was acquired by another lender, but that is still the same loan.]
2: Is this loan a home equity line of credit or a loan you've ever refinanced? [No, this loan hasn't been refinanced. This loan IS the refinance.]
3: Have you ever pulled cash out from this loan when refinancing it? [I didn't refinance this loan, so no? Or does it perhaps mean "Did you receive cash from this loan when it was originated?" instead? I did receive cash when I originated this loan, so I'll go with Yes, since I think that's actually what it's trying to ask.]
4: Have you used the money from this loan exclusively on this home? [No.]
5: How much interest you can deduct this year? (based on how much cash you pulled) [About 72% of it.]
1098 #3 (The Refinance loan, which was then acquired by a 3rd Party):
1: Was this loan paid off or refinanced with a different lender in 2019? [No.]
2: Is this loan a home equity line of credit or a loan you've ever refinanced? [No, this loan hasn't been refinanced. This loan IS the refinance.]
3: Have you ever pulled cash out from this loan when refinancing it? [Again, I didn't refinance this loan, so perhaps no? But, since it is the same loan as 1098 #2, and I did receive cash when I originated the loan, I guess I'll go with Yes again.]
4: Have you used the money from this loan exclusively on this home? [I'll just answer the same as with the 1098 #2, so No.]
5: How much interest you can deduct this year? (based on how much cash you pulled) [About 72% of it, same as for 1098 #2.]
This gets me through the questions with apparently no more errors. But, I'm not 100% sure that the answers are correct. I guess I'll cross my fingers and hope that they are!
