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Excess Mortgage Interest

shannonh23
Level 1

I have a client with two homes that need to be entered in the Excess Mortgage Interest section of Sch A. In 2019, both loans were re-financed and one of the loans was then bought by another company. I need five columns to enter all this data in, but Lacerte only has four columns. I attempted to search for the answer here, but that question doesn't have an answer anymore. What do I do to record this properly?

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George4Tacks
Level 15

One lender taken over by the other = simply treat it as one all  year loan. Do a bit of addition and consider it done. Just treat it like a name change, as really nothing other than that happened.

 

 


Answers are easy. Questions are hard!

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2 Comments 2
rbynaker
Level 13

Ugh, that's a terrible problem to have.  I'm not being sarcastic either, these things are a huge mess and having to pour five of them into one pot and stir would have me pulling my hair out!

I'm not a Lacertian, but I would combine the refi and the bank that bought it into one entry.  When these things get sold the only difference is who you write the check to, the loan is still on the same amortization schedule.  So, in essence, pretend you paid the original refi bank whatever's on their 1098 PLUS whatever's on the acquiring bank's 1098.

There is sometimes an element of finesse with these things.  Certain "monthly average" methods are not available in all circumstances.  I'd encourage you to have an expectation of what the answer is before entering everything into the software so if it's way out of whack you can look back at your data entry.  Pub 936 has some info:

https://www.irs.gov/pub/irs-pdf/p936.pdf

Page 13 (2019) lists different methods that can be used to determine the monthly average and also has the "You can use this method if" criteria listed.  It also tells you what to do if you have mixed-use mortgages.

Good luck!

Rick

PS: Someone from the Lacerte side could come along and tell you how to get a 5th column in there, if so you should ignore me and listen to them!

George4Tacks
Level 15

One lender taken over by the other = simply treat it as one all  year loan. Do a bit of addition and consider it done. Just treat it like a name change, as really nothing other than that happened.

 

 


Answers are easy. Questions are hard!