I calculated that your deductible interest should be $34,053.
Here's the calculation:
- First home average balance is $1,886,177 (beginning + ending balance divided by 2)
- Second home average balance for personal use is $383,665
- This means that for 4/12 of the year the mortgage average was $2,269,842 (first plus second home averages in bullets 1 & 2 above), and for 8/12 of the year it was just the $1,886,177 for the first home
- The adjusted average balance then is $2,014,065 ((2,269,842x4 + 1,886,177x8)/2)
- Take the total personal interest of $68,585 (63,714+4,871) times the limit of $1M divided by the adjusted average balance of $2,014,065 to get the deductible amount of $34,053
As far as entering this into TurboTax, I would suggest entering this as a single 1098 (enter the total interest and total balances) and then when you are asked for the interest calculated with the limitation enter the $34,053.
