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prettyspring
February 13, 2023
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Two 1098s due to mortgage being sold for tax yr 2022

  • February 13, 2023
  • 1 reply
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My loan was sold to a different mortgage servicer in Nov 2022 so I received two 1098s.  First 1098: box 2 outstanding mortgage: $229,000.  Second 1098: box 2 outstanding mortgage: $189,000. I read many questions and solutions in TT and they were for previous tax year and 2022 TT asked me more questions. I tried different answers and TT still think that the 2nd 1098 was a home equity line of credit (HELOC) or refinance so I didn’t get deductions for the mortgage interest from the 2nd 1098.    

First 1098:

  1. Box 2:   I entered   $229,000.    
  2. I paid points when I refinance this loan so I am spreading points over the life of my loan and get deduction
  3. Is the 1098 you’re working on now the most recent of your loan?  Answer Yes, or No?
  4. Is this loan is  a HELOC?   Is this loan a refinance of a previous loan.    My answer:  'Neither'

Second 1098:

  1. Box 2:  I entered $189,000
  2. Tell us about any points paid.   I have no points
  3. Is the 1098 you’re working on now the most recent of your loan?  My Answer  ‘Yes’
  4. a/ Is this loan HELOC    b/ This loan is a refinance of a previous loan   c/ This loan is neither of these.   *** When I selected ‘This loan is neither of these’  TT removed the credits that was previously given to the 2nd mortgage interest
  5. How to answer the following questions

      Q.1  Have you used the money from this loan exclusively on this home?

                    This applies to the entire lifespan of the loan, and includes improvements or mortgage payments                        made on the property that secure the loan.

  • Yes, I’ve used this loan only on the home I took it out on
  • No, I used some or all of this loan on a diff home

     Q.2   Since you’ve used money from this loan for things not related to the property it’s secured by, you can’t deduct ..

      Q.3   What is the balance of your loan on 12/31/2022

      Q.4    In both 1098 worksheet, TT asked ‘was this loan a result of a refinancing a previous loan’  and gave me errors

      Q.5    1st 1098 was a refinance so I still need to spread the points for the next 12 yrs.  I hope the 2nd 1098 won’t remove this deduction in 2023  

Thank you so much for your help!

    Best answer by DMarkM1

    First  keep in mind a loan sold to another servicer is the same loan.  With that in mind follow these steps to delete all the 1098 entries and start fresh.  

     

    1. "Deductions and Credits"
    2. "Mortgage Interest and Refinancing" "Edit/Add"
    3. Delete each of the form 1098s
    4. Continue
    5. Scroll to "Your Home"
    6. Revisit the Mortgage Interest topic
    7. Yes and Continue
    8. Change how I enter my form
    9. Type it myself
    10. Enter the first lender (oldest) name
    11. None apply
    12. Enter the form 1098 information for the oldest loan
    13. Primary Home (Assuming it is)
    14. Select you have no points to deduct on this loan (You will enter the points on the most current loan)
    15. Is this the most recent "NO"
    16. Since this one is a refinance or Home Equity then select "Refinance"
    17. Did you use the loan for anything for other than pay off existing?  The answer should be  "NO"  since you are amortizing points indicating the loan was used to refinance only.  
    18. Continue
    19. Add another 1098
    20. Change how I enter my form
    21. Type it myself
    22. Enter the second lender name
    23. None apply
    24. Enter the form info.  NOTE:  Box 3 should be the same date as the first (original) loan 1098 and box 11 should be the date the new servicer acquired the loan.
    25. Primary Home or same choice as prior loan as applicable
    26. Select the "I paid points..." option.
    27. Enter the loan info for the points (The points entered are from your original loan docs and will be automatically prorated over the months on the loan).  
    28. DO NOT check the box indicating you refinanced or paid off the loan
    29. Is this the most recent?  "Yes"
    30. Since this loan is the same as the prior it is a refinance then select "Refinance"
    31. Did you use the loan for anything for other than pay off existing?  Assuming the answer is "NO"
    32. Continue

    This should now show a full deduction including prorated points.

     

          Q.1  Have you used the money from this loan exclusively on this home?

                        This applies to the entire lifespan of the loan, and includes improvements or mortgage payments                        made on the property that secure the loan.

    • Yes, I’ve used this loan only on the home I took it out on
    • No, I used some or all of this loan on a diff home

    Since you are amortizing points that would indicate you answer "Refinance" and "NO" you did not use on something else.

     

         Q.2   Since you’ve used money from this loan for things not related to the property it’s secured by, you can’t deduct

    If you answer "NO" to question about use of the loan you will not get this question.

     

          Q.3   What is the balance of your loan on 12/31/2022

     

    If you answer "NO" to question about use of the loan you will not get this question.

     

          Q.4    In both 1098 worksheet, TT asked ‘was this loan a result of a refinancing a previous loan’  and gave me errors

    Errors should clear with the above entries.

     

          Q.5    1st 1098 was a refinance so I still need to spread the points for the next 12 yrs.  Yes, the loan sold to another servicer will continue to be prorated the same as the original loan.  

    1 reply

    DMarkM1
    DMarkM1Answer
    February 13, 2023

    First  keep in mind a loan sold to another servicer is the same loan.  With that in mind follow these steps to delete all the 1098 entries and start fresh.  

     

    1. "Deductions and Credits"
    2. "Mortgage Interest and Refinancing" "Edit/Add"
    3. Delete each of the form 1098s
    4. Continue
    5. Scroll to "Your Home"
    6. Revisit the Mortgage Interest topic
    7. Yes and Continue
    8. Change how I enter my form
    9. Type it myself
    10. Enter the first lender (oldest) name
    11. None apply
    12. Enter the form 1098 information for the oldest loan
    13. Primary Home (Assuming it is)
    14. Select you have no points to deduct on this loan (You will enter the points on the most current loan)
    15. Is this the most recent "NO"
    16. Since this one is a refinance or Home Equity then select "Refinance"
    17. Did you use the loan for anything for other than pay off existing?  The answer should be  "NO"  since you are amortizing points indicating the loan was used to refinance only.  
    18. Continue
    19. Add another 1098
    20. Change how I enter my form
    21. Type it myself
    22. Enter the second lender name
    23. None apply
    24. Enter the form info.  NOTE:  Box 3 should be the same date as the first (original) loan 1098 and box 11 should be the date the new servicer acquired the loan.
    25. Primary Home or same choice as prior loan as applicable
    26. Select the "I paid points..." option.
    27. Enter the loan info for the points (The points entered are from your original loan docs and will be automatically prorated over the months on the loan).  
    28. DO NOT check the box indicating you refinanced or paid off the loan
    29. Is this the most recent?  "Yes"
    30. Since this loan is the same as the prior it is a refinance then select "Refinance"
    31. Did you use the loan for anything for other than pay off existing?  Assuming the answer is "NO"
    32. Continue

    This should now show a full deduction including prorated points.

     

          Q.1  Have you used the money from this loan exclusively on this home?

                        This applies to the entire lifespan of the loan, and includes improvements or mortgage payments                        made on the property that secure the loan.

    • Yes, I’ve used this loan only on the home I took it out on
    • No, I used some or all of this loan on a diff home

    Since you are amortizing points that would indicate you answer "Refinance" and "NO" you did not use on something else.

     

         Q.2   Since you’ve used money from this loan for things not related to the property it’s secured by, you can’t deduct

    If you answer "NO" to question about use of the loan you will not get this question.

     

          Q.3   What is the balance of your loan on 12/31/2022

     

    If you answer "NO" to question about use of the loan you will not get this question.

     

          Q.4    In both 1098 worksheet, TT asked ‘was this loan a result of a refinancing a previous loan’  and gave me errors

    Errors should clear with the above entries.

     

          Q.5    1st 1098 was a refinance so I still need to spread the points for the next 12 yrs.  Yes, the loan sold to another servicer will continue to be prorated the same as the original loan.  

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      P
      prettyspringAuthor
      February 13, 2023

      Hi DMarkM1, 

      Your instructions worked!  Thank you so much! 

       

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