John owns 2 houses (primary and second home, no rental):
- House A: outstanding mortgage balance $800k; interest paid $20k
- House B: outstanding mortgage balance $500k; interest paid $10k
3 scenarios:
1) House A and B were both bought before Dec 15, 2017. TurboTax correctly applies $1M limit.
($20k+$10k) * $1M / ($800k + $500k) = $23,076 interest can be deducted
2) House A and B were both bought after Dec 15, 2017. TurboTax correctly applies $750k limit.
($20k+$10k) * $750k / ($800k + $500k) = $17,307 interest can be deducted
3) House A was bought before Dec 15, 2017. House B after Dec 15, 2017. TurboTax applies $1M and $750k limits to each individual mortgage.
$800k < $1M and $500k < $750k, so TurboTax treats total $30k interest as deductible, without limits.
BUG?????
I believe in the last scenario TurboTax should apply Table 1 from Part II of Pub 936, but the software seems to just blindly treat *all* interest as deductible. Can someone confirm this is a bug?
