Hello Turbo Tax Community:

FYI:  My mortgage Interest is ~ $7000

I am hoping someone can answer this question.  My taxes are relatively simple, I own a 2-family home and I live in one of the units and rent out the other unit.  I have been using TurboTax or years and I have always entered my Mortgage Interest in the Income section “Rental Properties and Royalties Section”  of Turbo Tax. 

I usually just use 50% of all expenses so Turbo -Tax automatically assigns what goes towards the “Personal” side of things.  When I enter my total Mortgage Interest here (Rental Properties an Royalties section) you are NOT SUPPOSED to enter any 1098 information in the Personal deduction section of Turbo Tax. 

So just for hell of it this year I did an experiment and did my taxes two ways 1) like I always have (discussed above) and 2) I did not ENTER any mortgage interest in the Rental and Royalties section and entered it all in the Personal Deduction section.

Doing my Taxes by entering my mortgage Interest in the Rental and Royalties section (using the 50% split) my expected Return is $950

When I enter all my mortgage interest in the Personal Deduction Section my expected return is $1500.

In both instances when I look at the completed Return PDF of my Return the Itemized Deductions worksheet has $7000 for Mortgage Interest.

Why is there such a big difference in my expected refund ?

 Is it because when you enter it in the Rental and Royalties section it only deducts the $3500 of my personal deduction for this year and the $3500 for the Rental is at a Depreciation Level ? 

I hate to think that I have been over paying taxes all these years.