Mortgage Interest adjustment Calculation. How to calculate the Mortgage Interest adjustment in California if the mortgage is over 750,000

[jxp603]

I have a mortgage over 750,000 in CA, how to calculate the Mortgage Interest Adjustment?

[KrisD · Accepted solution]

You can calculate it by yearly average or monthly. 

https://www.ftb.ca.gov/Archive/Professionals/Taxnews/2008/1208/1208_5.shtml

[toomanyusednames]

catch 22. how can i see my schedule A while still working on my taxes? turbotax won't let me see it.

[toomanyusednames]

nevermind, gotta PAY turbotax first..

[sho20bhit]

Hi,in my federal section tt said my original mortgage amount to be x ( 1098 box 1 summation of two lenders since i refinanced)  and the adjusted amount ( due to federal limitation of 750k) was y, which is also present in schedule A and x > y. However tt puts in CA(540) Part II , column C addition amount of a large negative value. I thought based on your answer above it should be (x-y ) = a small positive number in my case? Am I missing something?

[sho20bhit]

Hi,in my federal section tt said my original mortgage amount to be x ( 1098 box 1 summation of two lenders since i refinanced)  and the adjusted amount ( due to federal limitation of 750k) was y, which is also present in schedule A and x > y. However tt puts in CA(540) Part II , column C addition amount of a large negative value. I thought based on your answer above it should be (x-y ) = a small positive number in my case? Am I missing something?

[sho20bhit]

Hi,in my federal section tt said my original mortgage amount to be x ( 1098 box 1 summation of two lenders since i refinanced)  and the adjusted amount ( due to federal limitation of 750k) was y, which is also present in schedule A and x > y. However tt puts in CA(540) Part II , column C addition amount of a large negative value. I thought based on your answer above it should be (x-y ) = a small positive number in my case? Am I missing something?

[KrisD]

Did you report any of a 1098 on a Schedule E?

[sho20bhit]

No. I bought the home in march 2018 and then I refinanced it in the same year.
For the original loan in TT " Telll us about you loan balances" section , shall I put ending balance as 0 since I refinanced this loan with another lender? I am asking this because in state return it affects the total home acquisition debt.

[CCap]

Did you ever figure this out?  I have the same issue and it is driving me crazy.

[SLA]

I am having a similar problem. I refinanced the loan so I have two 1098 Forms -- the first is interest on the original loan for 9 months that was paid off.  The other is the 1098 for the interest on the new loan for 3 months.  Turbo Tax is treating these as two loans and adding the old and new loan together!  This results in a loan amount and balances twice the size of the actual mortgage.  Turbo Tax needs to correct this glitch and recognize that refinance is not two loans but simply a replacement loan.  I have had to override the calcualtions to get the correct mortgage balances.

[DianeC958]

On the refinanced mortgage Box 2 is asking for the amount of the outstanding balance of the loan as on 01/01/2019.  Since the loan did not start until after that the date the amount in Box 2 for the refinanced mortgage should be $0.  

If you put a balance for the loan in Box 2 for the refinanced loan the computer program will impose the limits on how much interest you can deduct on mortgages.

Link to Deduction Mortgage Interest

@SLA

[SLA]

Thanks for your response and it helped a little.  However, the basic problem is that the California Return is treating the refinance as a separate mortgage because there are two separate Loan numbers and two separate 1098 Forms for the original loan and the refinanced loan.  I had to override the California worksheet by treating them as one loan instead of two separate loans.  I wish the program would ask whether the property was refinanced and then ask for the beginning balance on the old loan, the date of refinance, and the ending balance on the refinanced loan.  It would then correctly calculate the mortgage interest deduction. 

[KrisD15]

If you enter the older loan first, the program does ask if it was sold or refinanced, then when the second 1098 is entered, the loan balance from the first 1098 is not added to the second. 

[randsom]

Even after your suggestions, I'm still getting a negative California adjusted mortgage interest figure.  I tried entering $0 for my old lender outstanding principal balance, but TT says it can't be a $0.  So frustrating.....