Yes, together. Use the mortgage amount on 1 January 2022 for the old loan and add that to the mortgage amount for the new loan at the end of the year (1 January 2023) and divide that amount by 2. That will give you the average balance for the year.
Follow these steps to eliminate the limitation on your mortgage interest deduction:
- Deductions and Credits
- I'll choose what I work on
- Update Mortgage Interest topic
- Delete both 1098s
- Done
- Update the Mortgage interest topic
- Yes
- Put in old loan first
- Primary Home
- None of the above
- Enter form information from old loan
- Continue
- No points to deduct
- Yes Most Recent
- Answer the Refi questions as needed
- Continue
- Add a lender
- Same steps as above for the new loan
- Continue
- Done
- Purchase date of first home should be same as the date in box 3 of 1098
- Purchase date of new home should be same as date in box 3 of 1098
- Payoff amount for old home and date of payoff
- Loan balance on 1 Jan 2023 for new loan; leave date blank. Amount should be less than box 2 on 1098
- Now you should see the page explaining the limitation
- You can click the help me with this link and see that if you take your loan balance at the beginning of the year box 2 old loan and add it to the balance of new loan at end of year (loan amount 1 Jan 2023) and then divide by 2 the avg will be below 750,000. Meaning all of your interest is deductible.
- In the "Your Adjustments" box enter the total interest paid for 2022 from box 1 of your 1098s
- Continue
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