Hi: Let me first give the details of the tax situation and then how TT mishandles it:
1) Details:
- We sold a house in May 2023 (mortgage balance of 335K paid off in May) -- call this House A
- We bought a house in May 2023 (mortgage is 610K) -- call this House B
- Total interest on House A: 4K from Jan - May
- Total interest on House B: 20K from May - Dec (Two 1098 issued since mortgage lender sold loan to a bank)
- Total points for House B: 2K (This was on the 1098 of the original mortgage lender)
Since the mortgage balance in any given month was never over 750K, I assume all interest and points should be transferred to Schedule A. Is this understanding correct?
2) TT mishandles it
However, it seems like TT sums the principal balance for House A and House B, leading to an incorrect principal amount exceeding 750K. It also ignores the points on the first 1098 from the original lender. The resulting refund is smaller than it should be.
My workaround: On the screen "Your mortgage interest is being limited", TT informs me that it may be wrong. I then enter the full amount of mortgage interest for House A and B as well as the points for House B into the field "Your adjustments", which fills Schedule A correctly (success!). Is there anything I can do to get TT to get it right or is using my workaround the best strategy?
Thanks!
