This procedure is from table 1 in Publication 936 and is used on the "Ded Home Mort" worksheet in TurboTax.
The deductible interest is a percentage of your total interest paid during the year. That percentage is derived by dividing your qualified loan limit which is $750,000, in your case, by your total average loan balances for the year.
In the example I am seeing, your average loan balances were for the old loan (500,000 + 442,000)/2 = 471000 and for the new loan (750,000 + 737,800)/2 = 743,900. Totaling 1,214,900.
750,000/1,214,900 = .617335 That is multiplied by the total mortgage interest paid which looks like 12,000 + 14,000) for a total of 26,000
The deductible interest is $16,051
Start by deleting all the 1098's you have entered and select "Done" to get back to a clean slate. Then make the following entries both primary homes.
Add your 1098 for your old loan Box 1- 12000 Box 2-500,000 Box 3- original loan date box 7 - checked
No points
"Yes" most recent loan for this mortgage
"Yes" original loan
Add 1098 for second loan Box 1- 14,000 Box 2- 750,000 Box 3- loan date (3/1/2021) box 7- checked
No points
"Yes" most recent loan
"Yes" original loan
"Done"
Enter the purchase dates when asked for each loan that should match the box 3 dates.
Enter the final principle payoff and date for the first loan
Enter the end of year or (beginning of 2022) balance for the second loan.
"Continue"
Go to "Forms View" open "Ded Home Mort" worksheet
Scroll down to the worksheet "Parts I and 2" to see the calculations
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