I do not think this person's replay is correct. The instructions and regs talks about the average of the mortgage balance. If you sell one house in August (close say 8/28) and buy another house on the same day, as we did in our case, then the average should be what it is for both houses for the whole year. A beginning balance of one house with a mortgage of say $842,000 to start the year and it being sold at the end of August means it has an average balance for the WHOLE year of $557,290. You need to count the $0 in the months Sept-Dec to get the average. If you then bought another house at the end of August and had a mortgage of $750,000 to start, that average should be around say $250,000 for the whole year, because Jan-Aug it was $0.... You should not be penalized by selling and buying as the $750,000 should be looked at in the whole for each month of the year and compared to your mortgage balance in effect for each month, not in aggregate how much in mortgages did you have outstanding in the year ($842,000 + $750,000).
So I do not think TurboTax is handling it right as I should be able to get a deduction for both mortgages. When I put in my new house's mortgage my tax owed actually went up which is what got me to looking at this...and found this post. So you are going to have to calculate what you think it should be and overwrite the values, which you should be able to do in the PC version of it. Not sure about the online version. It is simple math - get each months statement, plug it into a spreadsheet and calculate the average balance for the WHOLE YEAR for both mortgages...any month without a balance should be $0 and that should factor into the average....its math, that is how it should work.
