The amount of your mortgage interest and points may be limited if the amount of your outstanding mortgage loans are greater than $750,000 (if the loans were originated in 2018 or 2019) or $1,000,000 if the began before 2018.
This question about Enter your adjusted mortgage interest and points is because from the information you entered your mortgage interest and points are limited due to being over the limit of $750,000 or the $1,000,000.
If this is the case then you need to
First, figure out what your average mortgage balance is. To do this:
- Take the balance of your mortgage at the beginning of the year, and add it to the balance of your mortgage at the end of the year.
- Divide this amount by 2 to get your average mortgage balance for the year.
Next, you need to compare your average mortgage balance with the limits above. If your average mortgage balance is greater than the limits, then do this:
- Divide the limit by your average mortgage balance to get a percentage.
- Multiply the percentage by how much mortgage interest you paid for the year. This will tell you how much total mortgage interest you can deduct.
If your average mortgage balance is less than the limits above, then you can deduct all of the mortgage interest that you paid this year.
Please note: You can only deduct the interest you paid on the amount of the loan used to buy, build, or improve the home the loan is secured by (meaning the property that acts as collateral for the loan).
If your loans are not more than the limits then you need to review the information you put in for your loans.
For box 2 of a refinance loan the amount should be $0 since the box is asking for the outstanding loan balance as of 01/01/2019.
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