I'm not sure exactly how to deduct the mortgage interest that I paid.
At the start of 2022, I lived in a Condo that I owned and paid mortgage interest on. The average mortgage balance was around $360k. Roughly halfway through the year, I (along with my partner) bought a house, and we got a new mortgage. This new house required us to get a $1.6M mortgage, of which I am responsible for 50% (so, ~$833k). On my 1098 form for the house I see that we paid $30,500 in interest, so my share of the interest would be $15,250. Then, I sold the condo and zero'd out the mortgage. On my 1098 form for the condo, I can see that I paid $8,480 in mortgage interest.
Here's what is confusing me:
According to the IRS Publication 936 (source: https://www.irs.gov/publications/p936), If you sell your home, you can deduct your home mortgage interest (subject to any limits that apply) paid up to, but not including, the date of the sale.
...
Also, For debt secured after December 15, 2017, the limit is $750,000
I'm just really unsure of how to apply the calculations when I have 2 overlapping mortgages.
- My condo mortgage was less than $750k, so the limit shouldn't apply to that mortgage … or does the $750k limit apply across all mortgages?
- Because I sold the condo, do I automatically get to deduct all the mortgage interest on it, then account for the house separately? So, $8480 + whatever the calculation works out to for the house mortgage?
- Because the $833k debt was acquired in early June, my 'average' debt per month on that mortgage is ~$486k, assuming we evenly split it throughout the entire year. I tried following the IRS Average Mortgage Balance formula, but I wasn't sure I applied it correctly. Should I be averaging it as if I had the mortgage the entire year? Or do I only average it for the months that I had the loan?
- According to this turbotax answer: https://ttlc.intuit.com/community/tax-credits-deductions/discussion/selling-and-buying-a-home-in-the...
It seems as though the months that I didn't have the mortgage count as 0… which should reduce the average debt, right?
- There was an overlap period of about 4 months where I had both the condo and the house - does that affect the calculation?
