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Maximum mortgage interest deduction when selling and purchasing a home in the same year.

I sold my townhouse and paid off that particular mortgage in October 2020 and purchased a new home in November 2020 resulting in a new mortgage. Due to this, I received two 1098s (one for the paid off mortgage and one for the new mortgage) that exceed the $750,000 limit when adding the 1098s "Outstanding mortgage principal".

 

This negatively impacts the mortgage interest I can claim on my tax return since most of the mortgage interest is on the mortgage covering the home that was sold in October 2020. No interest was paid for the home purchased in November 2020.

 

Is there a way to manually account for this in TurboTax so that I can get the full interest deduction on the mortgage that was paid off?

 

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3 Replies
AlanT222
Expert Alumni

Maximum mortgage interest deduction when selling and purchasing a home in the same year.

Some TurboTax customers are experiencing an issue with their Home Mortgage Average Balance. This can cause the Home Mortgage Interest to be incorrectly limited.

If you're experiencing the issue above, please go here to receive email notifications when any updates related to this issue become available.

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Maximum mortgage interest deduction when selling and purchasing a home in the same year.

Is there a timeline for when I can expect a fix? I'd prefer to get my taxes filed and will look to a competitor's product if this is not fixed in a timely manner.

DawnC
Employee Tax Expert

Maximum mortgage interest deduction when selling and purchasing a home in the same year.

We have some work-around now for your situation.   What do I do if I have multiple 1098s from refinancing my home debt?   Follow the steps listed in the FAQ and let us know if you are still having an issue!  

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