Hi -
I am confused about how TT is handling the interest deduction calculation following refinancing.
I refinanced a (pre-Dec 2017) mortgage in October 2020 with the same lender.
- The old mortgage was about $880k so not subject to interest deduction reduction (because pre-2017). The new mortgage is also about $879k but now subject to reduction.
- Interest paid on the 1st loan was about $22k, on the 2nd, around $4k, for a total of $26k.
- TurboTax adds up both of the "outstanding mortgage principal" amounts (from the old and new mortgates) to use to calculate the percent of interest that is deductible - it then takes the fraction $879k / ($880k + 879k) = 0.5 and applies it to the $26k in total deductions to give me a reduced $13k deduction
This can't be right -- presumably right calculation should be based on the average of the two amounts (or better yet, no limit on the 1st mortgage interest (since pre-Dec 2017) and reduction on the second.
What is wrong here?
An earlier suggestion on a similar question said to remove the entry in Box 2 from the 1st mortgage 1099, but TT doesn't want to let this happen.
Thanks for any help!
