Should the mortgage interest that I input into the software match line 8a of Schedule A?

Forum|Forum|7 years ago
June 3, 2019
4 replies
18 views

The mortgage is under $500k, so I don't believe there are limitations on the amount that can be deducted.

TurboTax Home & Biz Windows

Best answer by

While you are in Forms mode of TurboTax, go to your Schedule A and right click on the value on Line 8a. Click on Data Source, and then click on the link that pops up to the Tax and Interest Worksheet.

You will be able to see the different additions/subtractions that determine how the program arrived at the final number on Line 8a. This also will give you a great starting point for narrowing down what area to go to in order to correct it should you disagree with this calculation.

Vanessa11_2

Level 13

Did you take cash out?

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Opus 17

Level 15

You can only deduct interest on acquisition debt, not equity debt.  Acquisition debt is debt used to buy, build, or substantially improve your home.

For example: You buy a home for $100,000 in 2009 with an $80,000 mortgage.  In 2017, your mortgage balance is paid down to $65,000.  You refinance for $125,000 and use $10,000 to remodel the kitchen.  Your acquisition debt is (65K+10K) = $75,000, so you can deduct 75/125th or 60% of your interest.

It doesn't matter if you got a new refinanced mortgage for $125,000, or if you kept the original mortgage and took out an HELOC for $50,000.  Either way, you now have $125,000 of total debt, of which $75,000 is acquisition debt and $50,000 is equity debt.

This calculation is repeated every time you refinance. Your acquisition debt never goes up unless you use the mortgage to pay for improvements.  The improvements must be done 2 years or less after you take out the loan, or no more than 90 days before you took out the loan.

Is your current mortgage 100% acquisition debt, or does it contain equity debt?

mcnees1Author

Level 2

The current mortgage does contain some equity debt, but the amount turbo tax enters on line 8a of Schedule A appears to be less than even the acquisition debt portion of the mortgage.

Anonymous

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