Hello, I have three 1098 forms from 2022: the first from the initial mortgage lender, and the second two from other companies that bought the loan over the course of the year. I also purchased points when taking out the mortgage initially. I've been looking at previous posts on the forum and the TurboTax help page, but I'm still not sure how to enter the 1098s. There are various workarounds described in older posts, and the help page refers to a question that says "Is this the original loan you used to buy your property?" but I don't see that in my TurboTax (Premier desktop) version. Anyway, here are my questions:Since I paid for points when initially taking out the mortgage, should I treat the initial lender and two subsequent lenders the same with regard to the "Tell us about any points paid to [lender]" page? (i.e., checking off the "this is a new loan on which I paid points (origination fees) in 2022" and "I bought or improved my main home with this loan in 2022" options)On the "tell us about your loan" page, there's an option to select whether "this loan was paid off or refinanced with a different lender in 2022." Should that be selected if the mortgage was sold to a new lender?Lastly, after all of the 1098s are entered, there's the page asking about outstanding loan balances at the beginning of the year/when the loan was paid off. Similar to the last question, should I interpret "paid off" as "sold to a new lender"? It doesn't look like I can leave this blank though, so I'm guessing the answer is "yes."Thank you!

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Multiple 1098s from mortgage being sold

Forum|Forum|3 years ago
February 27, 2023
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Hello,

I have three 1098 forms from 2022: the first from the initial mortgage lender, and the second two from other companies that bought the loan over the course of the year. I also purchased points when taking out the mortgage initially.

I've been looking at previous posts on the forum and the TurboTax help page, but I'm still not sure how to enter the 1098s. There are various workarounds described in older posts, and the help page refers to a question that says "Is this the original loan you used to buy your property?" but I don't see that in my TurboTax (Premier desktop) version.

Anyway, here are my questions:

Since I paid for points when initially taking out the mortgage, should I treat the initial lender and two subsequent lenders the same with regard to the "Tell us about any points paid to [lender]" page? (i.e., checking off the "this is a new loan on which I paid points (origination fees) in 2022" and "I bought or improved my main home with this loan in 2022" options)
On the "tell us about your loan" page, there's an option to select whether "this loan was paid off or refinanced with a different lender in 2022." Should that be selected if the mortgage was sold to a new lender?
Lastly, after all of the 1098s are entered, there's the page asking about outstanding loan balances at the beginning of the year/when the loan was paid off. Similar to the last question, should I interpret "paid off" as "sold to a new lender"? It doesn't look like I can leave this blank though, so I'm guessing the answer is "yes."

Thank you!

Best answer by AmyC

1. Generally, points are not fully deductible in the year paid. You would amortize any new points. If you used the same lender to refinance the loan, the points (old and new) will depreciate over the life of the new loan. The original mortgage is not a new loan and you may qualify to take all remaining points.

2. Yes

3. Yes

See Home Mortgage Interest Deduction - IRS, page 8, for complete rules on a refinance.

AmyCAnswer

Employee

1. Generally, points are not fully deductible in the year paid. You would amortize any new points. If you used the same lender to refinance the loan, the points (old and new) will depreciate over the life of the new loan. The original mortgage is not a new loan and you may qualify to take all remaining points.

2. Yes

3. Yes

See Home Mortgage Interest Deduction - IRS, page 8, for complete rules on a refinance.

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yackamoAuthor

Thanks for your response Amy!

I get it now that I shouldn't expect to deduct all of the points this year, but I'm unsure why you are referring to a refinance. Just in case I wasn't clear, I didn't refinance the mortgage. I didn't own a house previously, bought one in 2022, and then the mortgage was sold to different lenders twice. Does that change what you said about the "original mortgage" not being a "new loan"?