TurboTax's Your mortgage interest is being limited page in the step-by-step under Personal >> Deductions & Credits of the 2024 Home & Business Edition indicates "It's not common, but we could be missing details that would let you claim additional mortgage interest, for instance, you own a second home or you bought and sold a home in the same year." I believe that is the case for my situation, as described below, and would greatly appreciate feedback from the community, and guidance on how I should override the TurboTax calculation (if appropriate).
My family has two Qualified Homes including a Main Home that is our primary residence and a Second Home that we do NOT rent out.
We took out a mortgage on our Main Home after Oct 13, 1987, and prior to Dec 16, 2017. The average balance of the mortgage on our Main Home in 2024 was $467,292. The interest for the mortgage on our Main Home reported on form 1098 in 2024 was $12,281.
We took out a mortgage on our Second Home after Dec 15, 2017. The average balance of the mortgage on our Second Home in 2024 was $629,087. The interest for this mortgage reported on form 1098 in 2024 was $27,860.
Each mortgages was entirely Home Acquisition Debt used to buy the two respective homes, and each are secured by their respective home.
TurboTax is applying a qualified loan limit of $750,000 to both loans and calculating a limitation percentage of 68.4% (i.e. $750,000 divided by combined total loan amount of $1,096,379). It is then pro-rating our $40,141 in total combined interest by 68.4% to arrive at $27,456 in deductible home mortgage interest. It is precluding the remaining $12,685 as nondeductible mortgage interest.
Is the above TurboTax calculation correct? Shouldn't the full $12,281 in mortgage interest on our Main Home be deductible since the average mortgage balance was $467,292 in 2024 (i.e. below the $1,000,000 limit for mortgages taken out after Oct 13, 1987, and prior to Dec 16, 2017)? And shouldn't the full $27,860 in mortgage interest on our Second Home be deductible since the average monthly balance was $629,087 in 2024 (i.e. below the $750,000 limit for mortgages taken out after Dec 15, 2017)?
