How do you enter a beginning balance for a mortgage purchased towards the end of the year? Turbotax left the beginning balance blank for my 2nd house mortgage so it calculated my average balance as the entire amount for the year when it was only for 1 month of the year.
1st house purchased 3/21/17 and sold 12/8/21 : paid $13,500 of interest (loan amount for that year $422k) so based on your answer, I should be able to deduct all of this right?
Paid off 12/8/21
Moved to house purchased 12/1/21: paid $2,500 of interest (loan amount for $1.1m) , I would expect to only be able to deduct 750,000/1,100,000 = 68% of this.
But what turbotax did was calculate the average for the first house as ($422k+0)/2 = $211k
Then added the entire amount of the 2nd house mortgage $1.1m to that amount = $1.3m
And calculated my deductible interest as 750k/1.3m = 58% of all the interest I paid ($16k) = $9,280
Which is less that what I paid for the 1st house that was under IRS limits.
This seems very wrong, and what you replied makes a lot more sense, but I cannot seem to adjust my average balance for the 2nd house to be less than the full mortgage amount of $1.1m, even thought it was only for 1 month of the year.
I would appreciate if you can please help. Thank you
