Amending 2020 return and cannot enter points for refinance without getting errors saying I need a "Outstanding Mortgage Principal must have a value" How do I enter this?

Forum|Forum|4 years ago
October 29, 2021
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I did what Turbo Tax said to add the 1098's together. However, I have points and also have deduction limitation to contend with. the Mortgage itself is 1.5MM which originated in 10/2015, one Refi was done in 07/2019, and the last refi was done 01/2020. I paid points on both mortgages. The first refi, I need to right off the remaining amount of points paid and the other will start a new 30 year amortization. I keep running into the errors "Outstanding Mortgage Principal must have a value" when I try to just apply the points with no mortgage principal and outstanding principal. I am also unable to enter the correct time frame so I get the MFJ 1MM limitation and not the 750K limitation. Also These points are only shown on HUD not on my 1098. If I use the origination date for the purchase on my home of 10/2015 and the acquisition date of 07/2019, the wrong amount of points are used for remaining amount. If I put the 07/2020 in for the origination then the limitation is calculated as 750K deduction for my points. The only way to do what I am trying to do is override almost almost the entire worksheet. I amy as well just do my taxes the old fashioned way with pencil and paper. TurboTax does not appear to be asking the proper questions and therefore will not do any of these calculations correctly. I was already audited for 2019 because TT never calculated the Limitation at all. Help please.

TurboTax Home & Biz Windows

Carl11_2

Employee

When dealing with a refi, you enter each 1098 individually one at a time, starting with the oldest loan first.

When you enter the 2nd 1098 for the refi, one of the screens will have a selection on it to indicate it is a refi. You must select that option.

Take note that since your mortgage balance on Jan 1 of the tax year exceeded $750K your interest deduction will be limited to the interest paid on the first $750K of the outstanding balance.

These points are only shown on HUD not on my 1098.

That's actually a good thing that your points are not duplicated on the 1098. You can and should claim the points as shown on the 1098.

When it comes to things like acquisition date, pay attention to details. The acquisition date of the home and acquisition date of the refi are not the same. Additionally, if you did the refi with the same lender, then your remaining points (remaining amortized costs) on the old loan are not fully deductible in the year of the refi. They either continue "as is" over the life of the original loan, or you can add them to the amortized costs of the new loan for deduction over the life of that new loan.

If you did your refi with a different lender, then your remaining amortized costs on the old loan are fully deductible in the year of the refi. Just work through the amortized entry for the old loan in the assets/depreciation section. If you do it right, then the program (not you) will show those remaining costs to be deducted in the Rental Expenses section as a miscellaneous expense.

S

sehoffmaAuthor

Employee

I'm sorry, this makes no sense at all. The interest limitation for me is grandfathered at $1,000,000. Why does TurboTax say to add all the 1098's together, now you tell me to separate them? Since the the first refi is paid off why can't those points be deducted fully? Why does it matter if the same lender or multiple lenders. This is an entirely different mortgage with different mortgage points and the time frame starts over with a new 30 year mortgage. This is extremely confusing. I wish there was a place to complain about this, as the community board is not appropriate. I am so done with TurboTax ever since the $1MM limitation changed to 750K TurboTax has made many mistakes and now I am being audited due to malfunctions in the software. I still cannot figure out how to do this correctly and the IRS is now on my back. Wow!

fanfare

Employee

the treatment for points depends on whether you refinanced with the same bank or a different bank.

"Mortgage ending early. If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. However, if you refinance the mortgage with the same lender, you can't deduct any remaining balance of spread points. Instead, deduct the remaining balance over the term of the new loan."
A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event."

See IRS Pub 936 for more examples of further complications and the rules for those situations.