Question

Unsure how to handle primary home HELOC 1098 and new construction mortgage 1098

Forum|Forum|3 years ago
February 21, 2023
1 reply
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Wife and I have a HELOC from Lender A on our primary home. We also have a new construction loan from Lender B for a new home we are building on separate land. I input the 1098 from Lender A as our Primary home, but I'm not sure how to treat the 1098 from Lender B in TurboTax on our new construction mortgage. Do I input the 1098 from Lender B in TurboTax as Primary home, Secondary home, or Other? My understanding is we can deduct up to 24 months of interest on a new construction home mortgage.

HopeS

You would enter Form 1098 for the primary home in Schedule A (Itemized Deduction).

Yes, you may deduct the construction loan interest for your second home so long as the home becomes your main home or second home on the day it's ready for occupancy. You can deduct all the interest you paid on the construction loan within 24 months before the home was completed. The 2nd Form 1098 would also be entered on Schedule A as part of your mortgage interest deduction.

In TurboTax online,

Sign in to your account, select Pick up where you left off
At the right upper corner, in the search box, type in "1098" and Enter
Select Jump to 1098
Follow prompts

@alan6

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A

alan6Author

@HopeS

Thank you for taking time to review my question, however, my question isn't completely answered. I am using TurboTax online and when I'm inputting the new construction mortgage 1098, TurboTax prompts me to select Primary home, Secondary home, or Other. I am unsure the correct selection. I already selected Primary home for the HELOC mortgage interest on our primary home. Thank you.

P

PattiF

The construction loan will be for your second home.

From a TurboTax Tip article:

What counts as mortgage interest?

Deductible mortgage interest is interest you pay on a loan, secured by a main home or second home, that was used to buy, build, or substantially improve the home. For tax years prior to 2018, the maximum amount of debt eligible for the deduction was $1 million. Beginning in 2018, the maximum amount of debt is limited to $750,000. Mortgages that existed as of December 15, 2017 will continue to receive the same tax treatment as under the old rules. Additionally, for tax years prior to 2018, the interest paid on up to $100,000 of home equity debt was also deductible raising the previous total to $1,100,000. Loans with deductible interest typically include:

A mortgage to buy or build your home
A second mortgage
A line of credit
A home equity loan

If the loan is not a secured debt on your home, it is considered a personal loan, and the interest you pay usually isn't deductible. Your home mortgage must be secured by your main home or a second home. You can't deduct interest on a mortgage for a third home, a fourth home, etc.

@alan6

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