Single mortgage loan being treated as two separate loans

nshr
nshr Member Posts: 1 Newcomer
edited April 7 in Credits/Deductions

Hello,

I did not take the itemized deduction in the first year (2021) I purchased my home (primary home) since the standard deduction was more beneficial. Instead, I am amortizing the points paid.

I entered the mortgage interest information from Form 1098 (2024) in the "Your Mortgage Interest" screen and selected the option to amortize mortgage points on "Other Mortgage Information" screen. On the next screen, under "Your Points Not Reported on Form 1098," I entered the same mortgage principal balance and origination date as in the "Your Mortgage Interest" screen, selecting "No" for whether this is a 2024 loan on primary home (since it is not a 2024 loan).

However, despite the loan being a single loan, the system is treating my mortgage as two separate loans: 1) loan that I am paying mortgage interest for and 2) loan that I am amortizing points on. The mortgage lender screen is auto-populated (cannot change mortgage lender field) and has 2 mortgage lender information sections:

Mortgage Lender: ABC
Loan balance as of January 1, 2025: $350K
Purchase Date: 09/10/2021

Mortgage Lender: ABC
Loan balance as of January 1, 2025: $350K
Purchase Date: 09/10/2021

Do I change one of the loan balances to $0 or leave both at $350K? Now it seems I have 2 loans with a total $700K loan balance, but in reality, I only have one with $350K balance.

Based on what I enter as loan balance/s ($700K vs $300K), the average balance changes in the "Confirm your average mortgage balance"

Please help. Thank you.

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Answers

  • Te_ariki
    Te_ariki Member Posts: 13 Level 3

    Hi,

    I had a slightly different scenario but I hope this is helpful.

    I had a situation where my loan was sold do a different brokerage this year and I remember seeing two loans pop up and being confused about the loan balance. I was pretty stressed out about it. I ended up just entering the actual loan balance on both places(I'm looking at my account now and see I have box 2 populated on both of them even though one was sold). I just went with that and then a bit later I came to the deductions summary page. It breaks down the itemized deductions and compares it to the Standard Deduction. The homeowner expenses on the Itemized Deductions summary looked right and so I went with that.

    I'm looking at some other community threads (like this one

    https://community.freetaxusa.com/discussion/1864/two-1098-forms-outstanding-loan-balance

    and this one

    https://community.freetaxusa.com/discussion/832/mortgage-was-sold-to-another-lender-now-i-have-two-1098

    and it looks like it might not have been the right thing to do, but since the average loan was below the $750,000 threshold maybe I made it out fine. (My return was accepted and return received a month ago).

    It seems like the software doesn't have a better way to deduct the mortgage points. So I'd have the two mortgages, have the balance to one say $0 and then review the Itemized deductions summary and make sure the expenses look right and move forward with that.

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