I have 2 types of questions, the first is a tax question and the second is an implementation question in turbotax.
Tax question:
In CA, you are allowed to deduct the mortgage interest on your home up to a loan value of $100,000 under non-acquisition debt. This is unlike federal. I did a cash out refi on my home, say $250k cash out to refi my home and $200k refi of a rental home mortgage. Say the total loan is $400k for this example, $150k for my acquisition debt and $250k for non-acquisition (rental) debt. I can deduct the interest on $150k as home mortgage on my federal taxes and the interest on $250k as business/rental expenses. Since I am not a real estate professional, I cannot use losses in the rental to offset personal income. BUT, if CA allows deductibility of the interest on $100k of non-acquisition debt, can I deduct that interest on $100k that is used for the rental plus the $150k of home acquisition debt? If so, I would need to adjust the expenses on the rentals on the CA return and only allocate the interest on $150k as rental expense. This saves me a few hundred dollars on my CA return, so it is worth considering. I do realize that I may have to pay it back down the road since there is that much less depreciation on the rental homes, but it is always better to defer taxes
Implementation questions:
How in the world would I do that in turbotax?
In turbotax CA state, it forces me to generate a Deductible Home Mortgage Interest Worksheet (tried deleting it) that is frustrating in that entries cannot be changed and does not tell me where to change it. For example, on loan 1 there is a box (this loan was refinanced in 2022 with a new form 1098) that is checked yes incorrectly. I cant change the box, I cant override it. What to do? Secondly, part 3 calculates the amount of nonacqusition debt that is deductible e.g. the portion allocated to the $100k loan from the $250k loan in the example. But that amount in line 9 doesnt go anywhere. If I look at schedule CA line 8a column C, that additional non-acqusition mortgage interest cost on $100k should go there, but instead the entire amount of non-acquisition interest costs is there. schedule CA line 8a column A should have the interest on the home acquistion debt and line 8a column C the non-acquisition interest costs. Then the CA Sch E needs to be changed. Where to change that? Sch E entries are not easy to override.
Thanks for any ideas!
