Hello,
I bought a 3B Townhouse last year and had mortgage on it. Say I borrowed 1 million and paid 30k interest. I can only deduct around 20k interest from my income since any interest from 750k and above debt are not deductible. TurboTax knows this can handles this for me, when it asked me to input my form 1098.
Now, I have also rented out some rooms last year and got some rental income. Say the square footage percentage of rented area is 15%, then TurboTax puts 15% of the mortgage interest to rental expenses on Schedule E , and the rest of 85% goes to personal deductible on Schedule A. It seems that, in this way, TurboTax never asked me to input form 1098 when working on Schedule A and it does not place a cap on the personal mortgage interest deductible. That is to say, it's now deducting 30k*0.85=25.5k interest compared to 20k, which resulted bigger refund.
I am suspicious that this is too good to be true, but I cannot find a way to fix it, nor do I know what is the right way to calculate. Is there anyone having the same situation as I guess this should be a common scenario?
