thank you for your help Diane
you said
" There is a question that asks Is this the original loan you took out to purchase this property? If you answer No, on your refinanced loan, that this is a home equity line (HELOC) or a loan that's been refinanced, the program will deduct all of the mortgage interest you paid."
You are correct. This would be the correct thing to do for FED filing. But when i do this, in the state filing portion, state thinks i have 2 loans totaling roughly 2 times my actual loan amount. Details below
The problem lies in the form "540/540NR Deductible Home Mortgage Interest Worksheet" in the STATE filing
If i do as you suggest (I think it is correct to do this in FED filing) , there will be 2 loan in this form.
Even though each loan only cover part of the year, one 3 month, on 9 month,
Turbotax simply use the beginning balance (and assume the loan is outstanding for 12 month) to calculate the total average balance. This is a mistake.
With this mistake, the same loan is counted twice. Each one will add to the average balanced of all home acquistion debt (line 2)
it thinks my average balance of all home acquisition is almost double what what it really is.
When this inflated average balance exceed the 1M limit in California, some of the mortgage interest are no longer deductible in the state filing. This is the problem that needs fixing
I hope this is clear now? and thanks for your help
Frank
@DianeC958 @AmyC
