california mortgage interest adjustment after refinance

The current (not final yet) version of "540 Schedule CA California Adjustments" appears to be treating a refinance transaction as though I had two separate loans active, and therefore adjusting my interest deduction incorrectly. The original loan in question was in mid-2017, so qualified for the $1m cap rather than $750k, and so the California mortgage deduction should be the same as the Federal one.

 

TT (specifically the California mortgage interest deduction worksheet that feeds into Schedule CA) is adding the original loan's average balance to the refi loan's average balance, and dividing $1m by that total. What it should be doing is calculating the average balance for the year by prorating each loan's average balance--that is, for example, if the loan was refinanced on Sep 1, the average balance should be 2/3 of the original loan's average balance plus 1/3 of the refi loan's average balance, and the adjustment should be based on $1m divided by that prorated average. (The Federal step-by-step makes the same mistake, but it doesn't really matter since the interest-limit calculation is done by the user outside TT.)

 

TT isn't asking about the payoff date for the orig loan (even though there's a form entry for that), and then is ignoring how long each loan was held when it calculates the "average".

 

I can of course fix the problem by overriding either the calculated average balance or the interest cap, but I shouldn't have to do that.