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Deductions & credits
Has TT fixed the problem with average mortgage balance?
I still cannot figure out how to override the incorrect result. In my case, I sold my house on June 30 and paid off the $1.0 million mortgage. I bought a new house on August 1 with a $600,000 mortgage.
I believe the IRS would allow a deduction equal to 75% of the interest paid to old house lender, plus all the interest paid to new house lender. Correct?
The most obvious issue I see when going into supporting worksheets is that new house average mortgage balance is $600,000 as it doesn't pro-rate for the 5 months outstanding. (The old house mortgage correctly calculates its average at $500,000, although that appears to be correct only in my instance of being outstanding for exactly a half year......beginning balance $1.0 mil / ending balance zero.)
So my TT average mortgage is incorrectly calculated as the sum of the two averages, or $1.1 million. In turn my interest deduction is limited to 68% of total interest i report from the two 1098's.
Interestingly, if the average balance on new house was calculated at $250,000 (5/12 x $600,000), the sum of the two averages would be $750,000, and TT would incorrectly not limit my interest deduction.
Isn't this a very common situation?