I refinanced a mortgage in 2020 and borrowed more than the older loan payout in order to pay off a car loan as well. I assume that the answer to the above question in my case equals the amount of the refinance loan, less the payout amount for the car. But TurboTax still thinks the interest I can claim is the full interest paid in 2023. In order to get the correct interest to reflect the "acquisition amount", I need to enter the acquisition portion of the remaining principle at the end of 2023 and not the acquisition amount at the time of the loan. This TurboTax question (and similar question on Fed Mortgage worksheet) is misleading. Am I answering this question correctly?
In addition, the reason you are seeing all of your 2023 interest as deductible may be because you have paid down your mortgage enough to cover the cash-out. For income tax purposes, all principal payments go toward the cash-out portion of the mortgage first until it becomes 0.
If your refinance in 2020 was to refinance the original mortgage to buy the house, enter the original principal borrowed to buy the house, not the amount refinanced minus the cash-out for the car. Enter your 1098 as you received it, including the origination date for the refinancing loan in box 2. Then when asked, select 'This is a refinance of a previous loan'. Turbo Tax will ask you to enter the purchase date of the home bought with this lender. Enter the origination date of the original mortgage.
In addition, the reason you are seeing all of your 2023 interest as deductible may be because you have paid down your mortgage enough to cover the cash-out. For income tax purposes, all principal payments go toward the cash-out portion of the mortgage first until it becomes 0.