I refinanced my primary home this year. Is the deductible interest percentage based on the sum or the average of the two mortgages?

[NCPilot]

I refinanced my primary home this year and received two 1098s. My loans were both just over $750,000. I'm confused why TurboTax adds up both of the "outstanding mortgage principal" amounts to then calculate the percent of interest that is deductible. Why not average the two instead of adding them up?

1098a - Box 1 - $18,109, Box 2 - $788,250
1098b - Box 1 - $7,415, Box 2 - $791,538

TurboTax says deductible interest = $750,000/($788,250 $791,538) x ($18,109 $7,415) = $12,117

It seems to me deductible interest should be = $750,000/(($788,250 $791,538)/2) x ($18,109 $7,415) = $24,235

Which is correct? I've consulted pub 936.

[Cynthiad66]

Please try this:

If there is a refi and there was an outstanding mortgage principal listed in both of them on Line 2 on the 1098. When you do put an outstanding balance in both forms, then the program adds them together and if that number is greater than $750k, then it puts you in the category to "limit interest". To get that to go away, you need to go back to the deductions section and click on "edit" mortgage interest statement. Change the line 2 of the mortgage that you no longer owe on (like the one that you refinanced and paid off) to a 0 (zero) because you have refinanced out of that loan and no longer have an "outstanding mortgage principal". Once you change one of them to zero (the one that was paid off by the refinance) then it should no longer pop up with that error at the end when you go to file.