Incorrect determination of allowable mortgage deduction

[madel21]

I sold my primary residence in April and purchased a new primary residence in June. TT indicates that the interest on the mortgages are not fully deductible. The only reason that would be true per the help and the IRS publication is if either mortgage was above $750,000. However, both home loans were/are below this level, and as can be seen by the dates, they did not overlap. I cannot see why TT is not allowing deduction of the full combined interest amounts. Is it adding the loan values together? How can I tell how it is making this determination and computation? How can I get the correct deductions for all the interest paid?

[madel21]

More on the problem: I found the issue is that the Schedule A Deductible Home Mortgage Interest Worksheet did in fact add the two mortgage values together assuming both loans were held for 12 months. However, the first loan was held for 4 month in 2022 and the second was held for 7 months, and they were not concurrent. Thus the correct calculation would be = ((Loan 1 amount * 4 months) + (Loan 2 amount * 7 months))/11total months. Now that I know this, I tried to change the form, but TT would not allow it. They need to fix their algorithm.

[Marka81]

I just made a post about a similar issue. Did you figure out how to handle your issue?

[MarilynG1]

Both amounts of mortgage interest reported on Form 1098 should be added together and reported on Schedule A, Line 8a.  The amounts reported would be not be limited because the loans were not held for a full year.  If you had MIP, Scroll down to the section 'Qualified Mortgage Insurance Premiums Smart Worksheet' on Schedule A too see the calculations there.  Otherwise, the amount on Line 8a should appear on Line 8e and Line 10. 

Check your Home Mortgage Interest Worksheet for calculations.  You want to make sure you have a Beginning/Ending Date for the first mortgage, and a Beginning Date for second mortgage that is after ending date for first mortgage.  If the dates overlap, the mortgage balances will be added together, unless one is indicated as a 'Refi'.  Check the Home Mortgage Limitation Smart Worksheet section. 

In my test return, I had two mortgage totaling over 750K and interest was not limited.  You could delete your 1098 entries and re-enter.

@Marka81 

@madel21 

[Marka81]

@MarilynG1 My issue is a bit different, my interest would be limited. Can you help with my post?

https://ttlc.intuit.com/community/tax-credits-deductions/discussion/mortgage-interest-deduction-issu...