2-family house 1098 Box 2

[flamingvan]

Under 'Deductions and Credits' I'm entering 1098 amounts for my 2-family house where I rent one unit and reside in the other.  I understand that I should divide the amounts for interest and taxes paid, but what about the outstanding principle?  Should I enter the full amount shown on the 1098 or just a portion of it?

[KrisD15 · Accepted solution]

It wouldn't hurt to split it. 

Since part of the loan is for the rental, that portion of the loan is not limited by the balance limitation for home mortgage interest. 

[flamingvan]

I made this change in Turbo Tax (decreased the outstanding mortgage principal) and my federal refund amount increased by a significant amount.  Why would that be?