Enter your 1098 as you received it. After you select Done you get more questions:
When asked when did you buy this hose from your lender? 12/01/2012
When asked Did the original purchase date occur prior to 2017 and no cash-outs? NO
When asked How much of this loan was used to buy or improve the home? $1,000,000
With these entries I got an interest deduction of $20,320 and the option to enter my own value if I disagree.
This interest deduction is based on the $750,000 limit that Turbo Tax applies to the entire balance when you have a cash out refinance after 12/15/2017. Pub 936 does not specify that refinanced pre-2017 acquisition debt becomes post-2017 acquisition debt. Since $906,006 is the amount of refinanced pre-2017 acquisition debt, you can calculate your deductible interest as $906,006/($1,409,042 assuming this is your average balance) = 64.3% of $36,575 = $23,551. You can put $906,006 on lines 2 & 11 and $1,409,042 on line 12.
