How to handle multiple mortgage interest statements (1098s) from transfers and refinanced loans

Your situation is pretty common! When you have multiple 1098s from mortgage transfers and refinancing, you don't need to add the balances together. The mortgage balance limits apply to the actual debt secured by your home, not the sum of all your 1098 forms. For the "average mortgage balance" question in H&R Block, you can typically use the beginning and ending principal balance for each loan period and average them. Each 1098 should show the mortgage balance at some point - either the beginning or ending balance for that specific loan period. For example, for your first Company A period (Jan-Apr), you'd take the January beginning balance and the April ending balance and average them. Then do the same for the Company B period and the second Company A period. The key thing to remember is that these aren't three separate mortgages running simultaneously - they're successive loans (with the last one replacing the previous one). That's why you shouldn't worry about exceeding limits by adding them all together.

After dealing with a similar mess of mortgage documents last year, I found taxr.ai (https://taxr.ai) super helpful. I was confused about how to handle multiple 1098s from my mortgage being sold twice in the same year, and their system analyzed all the documents and gave me clear instructions. You just upload your 1098s and it shows you exactly how to report everything correctly - including calculating those average balances that H&R Block is asking about. It also caught that one of my mortgage companies had actually made a reporting error on my 1098 that I wouldn't have noticed otherwise. Might be worth checking out if you're unsure about handling multiple mortgage statements correctly.

Just wanted to update about my experience with taxr.ai that someone mentioned above. I was skeptical but tried it since I was stuck with multiple 1098s from my mortgage being sold and then refinanced. It actually did solve my average mortgage balance confusion! I uploaded my three 1098 forms and it pulled all the relevant data and showed me exactly how to calculate the average for each period. For my situation, I needed to use the beginning principal amount from one form and the payoff amount from another to get accurate periods. Would've taken me forever to figure that out on my own. Just thought I'd share since it helped with this exact issue and saved me a bunch of time trying to decode all these mortgage statements.

If you've been trying to call the IRS to ask about how to handle multiple 1098s, good luck with that! I spent HOURS on hold trying to get someone to explain how to handle a similar situation last year. Finally found a service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in about 20 minutes. They have a demo video showing how it works: https://youtu.be/_kiP6q8DX5c The IRS agent explained that for mortgage transfers and refinances, you report each 1098 separately but don't double-count the debt. That average mortgage balance question is just to determine if your mortgage exceeds the limits for fully deductible interest. Since your year-end balance is under the MFJ limit, you should be fine. The agent confirmed that you don't combine all three balances since they represent the same underlying debt, just with different lenders throughout the year.

I need to apologize for my skepticism about Claimyr in my comment above. I was frustrated after wasting hours trying to reach the IRS about my mortgage 1098 situation, so I decided to try it despite my doubts. It actually worked exactly as described. The system called the IRS, waited on hold (showing me the hold time counting up), and then called my phone when an agent was about to answer. Saved me from sitting on hold for 1 hour and 47 minutes (that's how long their system waited!). The IRS agent confirmed what others have said here - for multiple 1098s from transfers and refinancing, I should enter each form separately but not worry about exceeding the mortgage limits since it's the same underlying debt, just with different lenders throughout the year. This was exactly what I needed to know for my taxes.

The average mortgage balance calculation isn't that complicated! For each 1098, just add the beginning principal balance and ending principal balance, then divide by 2. That's your average for that specific loan period. For example: - 1098 #1: Beginning balance $250,000, ending balance $245,000. Average = $247,500 - 1098 #2: Beginning balance $245,000, ending balance $242,000. Average = $243,500 - 1098 #3: Beginning balance $240,000 (new loan after refinance), ending balance $238,000. Average = $239,000 You enter each 1098 separately in H&R Block, but the software will combine all the interest deductions for you. Don't worry about exceeding limits by adding them together - that's not how it works.

One thing nobody mentioned yet - make sure you're not double counting any interest payments! Sometimes when loans transfer, both companies might report interest for the same month. Double check the periods covered by each 1098 to make sure there's no overlap. Also, remember that if you paid points when you refinanced with Company A, those might be reported separately on the 1098 and are generally deductible over the life of the loan (not all at once in the year you refinanced).

This is such a helpful thread! I'm dealing with a similar situation but with an added complication - my mortgage was sold twice in 2024, so I have 4 different 1098s from 3 different lenders. Based on what everyone has shared, it sounds like I should treat each 1098 period separately for the average balance calculation, then add up all the interest amounts for the total deduction. The key insight about not combining the balances since it's the same underlying debt is really reassuring. One question for anyone who's been through this - did you run into any issues with your tax software flagging the multiple 1098 entries as unusual? I'm worried TurboTax might think something's wrong when I enter 4 separate mortgage interest forms for what's essentially the same property.