Technically, you must figure the average balance of each loan individually. The three column table you provided simply lists the ending monthly balances of each loan side-by-side with the average for each loan at the bottom. There is no 'three column table approach' to figuring the mortgage deduction. For loan A, the average balance is calculated by summing the ending balance for the months that had a balance and dividing by that number of months. It's the same for loans B and C except you divide balance sum by 12 months (this is equivalent to combining loans B and C). Add the average balances together and divide into $750K to get the % interest deductible. This approach is covered in Pub 936 but Turbo Tax doesn't use the Statements Provided by Your Lender method. Save this result to compare against what Turbo Tax comes up with.
In Turbo Tax, you will enter each 1098 in order. It will ask for the balance at the beginning of the year (1/1/2024). This is the value in box 2 of the 1098. It will ask for the balance at the end of year (12/31/2024) or the balance just before being paid off or refinanced (not $0).
After entering the 1098s, and selecting Done, Turbo Tax should ask more questions aimed at determining how long loans B and C were secured by your qualified residence. Be sure to indicate B and C were secured by your main home for all 12 months. Turbo Tax may then say your deduction is being limited and show you what it came up with and the option to enter your own amount. If the value you figured is significantly more, enter your value.
Yes, points are subject to the % limit. Note: if points were charged on loan C and you made a down payment with your own funds that were at least equal to the amount of points paid, you can choose to include all of the points paid for loan C instead of spreading them out over the life of the loan.
