Deductions & credits

Your new home would be the primary home and your old home is a secondary home. Here is how you will enter in TurboTax. 

For the old home

1. You should enter your Old Home (the one on the market) first. This creates a logical timeline for the software to follow.
2. Enter the full interest and the January 1 balance.
3. When asked "Is this your main home?", select Yes (because it was for part of the year).
4. When asked if the loan was paid off or sold, select No (since it hasn't sold yet).
5. When asked "Is this the most recent 1098?", select No.

New Home (1098 #2):

1. Enter the interest paid since you moved in.
2. When asked "Is this your main home?", select Yes (because it is now).
3. For the Outstanding Principal (Box 2), enter the starting balance of the new loan.
4. When asked "Is this the most recent 1098?", select Yes

TurboTax often combines the Box 2 principal amounts from both forms. So if House A and House B each have a $500k balance, TurboTax could think you owe $1M and limit your interest—even if you only owned both for a month.

The "Workaround" for the principal balance:

1. If the software tries to limit your interest incorrectly, consider entering a manual "Average Balance" entry.
2. For the Old Home, take the Box 2 amount and multiply it by the fraction of the year you lived there (e.g., if you moved July 1, use $50\%$ of the balance).
3. For the New Home, do the same for the months you've lived there.
4. This forces the software to see your true average debt for the year, rather than a single total that wik