2 Mortgages over the $750K limit

[garman7777]

I have two mortgages in 2023 with over $750K in outstanding balance.  The larger mortgage is $1.2M outstanding at 5%.  The smaller mortgage is $800K  outstanding at 2.75%.  

May I only deduct the larger mortgage (which as much more interest paid) up to $750K?   In other words, I paid twice as much mortgage interest on the bigger loan, and I want to maximize the amount of the deduction.

[zomboo · Accepted solution]

The short answer is no, not exactly. The remaining acquisition debt for the two loans are added together and then limited to $750K to figure the percentage of interest that can be deducted. 750K /(1.2M + 800K) = 37.5%. So you can deduct 37.% of the total interest paid.

[Opus 17 · Accepted solution]

No, you have to enter them together and it gets averaged.  There is an approved method in IRS publication 936 and Turbotax follow that method.

https://www.irs.gov/forms-pubs/about-publication-936

[garman7777]

Thank you.