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Home Loan Interest - Large Lump Sum Payment made in January
We had a loan with a principal balance of ~1,270,000. In January we applied a 500,000 payment, thus reducing amount down to 760000 after selling our prior home. My 1098 only has two numbers, the original amount of 1,270,000 along with the interest paid of 44,000. Turbo tax seems to scale the deduction based on 750000 / 1270000 which of course is incorrect since the loan was only that high for January. I went ahead and calculated the percent of interest that would be applicable for each month - (interest paid * (750000 / principal balance)) when principal was over 750k. I then summed the 'scaled' interest amount for the year and put that amount in turbo tax along with the principal amount of 750000 so it applied the calculated interest amount. I also added a comment into the form since i flagged my amount differed than what was provided to me. Is this logic valid or do i have to use the original loan amount on January 1st for every month?