Question

2 homes in 2023 and moved state

Forum|Forum|2 years ago
April 12, 2024
1 reply
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Hi,

I lived in CA in 2023 until Dec 15 and had a house say house A until then. After Dec 15th I was advertizing the house for rental, which was rented out in Feb, 2024. I paid mortgage interest and rental tax for this property in 2023 and have 1098 form

From Dec 16th 2023 onwards, I stayed in a new house (house B) which I purchased as a primary residence and was closed in 22nd Nov, 2023. I paid interest and points and some taxes for this new house in 2023 and have 1098 form. My loan start date for this property is 11/14/2023. However, this loan was sold to other mortgage company in 01/02/2024. I have a second HELOC loan on this same house which I paid off in Feb 2024 and have paid some interest on this loan as well both in 2023 and 2024.

Question:

In deductions and Credits section of TurboTax:

1) It asks for Home Loan Deducation summary. Will I enter both the loan information as shown in 1098 form ? 2) For the question 'What kind of property you have' for each loan information, what should I choose for loan on house A and house B ? Options are primary/second/others.

3) For question, If this is the most recent form for this loan ? Should I answer yes, since for house B the loan got sold in 2024.

4) For property tax amount, do I enter the full amount in the 1098 form of house A here or will that be counted towards rental expense ?

5) Will the HELOC loan information also go here ?

In short, can someone guide me through all the questions being asked in that section for both loans on the house A and house B.

Z

zomboo

I suggest designating home B as your primary home for 2023. If you paid points when you took out the mortgage and they are listed on the 1098, you will have the option to deduct them this year instead of spreading them out over the life of the loan. I assume you don't have a 1098 from the 'sold to' lender for 2023. In this case Select 'This is the latest 1098'. Next enter your 1098 for the HELOC. Select the HELOC is secured by home B. The average balance for the HELOC should be taken over the active months of the home B mortgage regardless of the HELOC origination date (same for 2024).

Designate home A as your second home for 2023 which you converted to a rental on Dec 16, 2023. Select 'other' to the Primary/Secondary/Other question. You can claim rental expenses for 1/2 month on interest and taxes, and advertising costs.

However, your mortgage deduction is going to be severely limited for 2023 because of the short time home A is a rental and buying a new home so late in the year. Claiming rental expense for 1/2 month will help a little but it will be much better starting in 2024 when home A is a rental all year.

S

sorabhitAuthor

Thanks for your response. Do I have the option to select home A as primary as well? Given majority of the tax and interest for 2023 was paid on that.

If yes, then should I categorise home B as primary/secondary/other in that case? Are you saying this way I won’t be able to take deduction on interest and points paid for home B ?