I purchased a $1.5M home in 2025 with a loan of $1.35M. My mortgage interest was $37K, but Turbotax figures my max deduction at $15K. Shouldn't it be nearly $21K?

[scott-eargle]

I don't have any other mortgage loans, this is my primary/only residence. I am itemizing deductions

[NCperson]

@scott-eargle did you have a mortgage on a prior home that was paid off earlier in the year? what are those details? In what month did you purchase the home you now own? 

[scott-eargle]

No, I did not have a previous mortgage that was paid off earlier in the year…I sold my previous home in 2022. I closed on my current home last June. My builder carried my construction loan and I paid an additional $3K mortgage interest on that loan.

[MaxA1]

Your mortgage interest deduction is limited if your mortgage loan is greater than $750,000 ($350,000 if Married Filing Separately).  This is why you're not seeing the full mortgage interest deduction in your itemized deduction.

See the following link for more information on this, as well as how ‌mortgage interest is calculated in these situations:

• Publication 936 (2025), Home Mortgage Interest Deduction

[NCperson]

@MaxA1 the question was not why the mortgage interest was limited; it was why the mortage interest was limited so much? 

if the limit is $750k and the average balance is $1.35m, why isn't the interest 750/1350*37K or $21k? 

TT calculates $15k.  Why? 

[scott-eargle]

I was able to figure out the problem by contacting a live expert at TT.

TT should calculate the max mortgage interest deduction at 750/1350*37K, just as you stated…that’s why I was confused. Turns out, because my builder carried the construction loan, there were some boxes that were incorrectly checked (on my part) which was leading to the error.

Bottom line, once the corrections were made, the deduction was nearly $22K!