Mortgage Interest limitation - TurboTax is adding all the mortgage's together

[TracyPat]

I had a construction loan in 2021 (Bank #1) that was used through midyear 2022 (less than $750k), because of interest rates I switched to a different Bank (Bank #2) to pay off the construction loan from Bank #1 (Loan still less than $750k), about a month later Bank #3 purchased my Mortgage loan from Bank #2.   

So I only had and used 1 amount (less than $750k) for my primary home build at all times during 2022.  I of course received 3 1098's and when I enter all three of the 1098's in TurboTax Home and Business Software, it combines all the Loan's which puts me well above the $750k debt limit and severely limits the allowed Mortgage interest deduction on Sch A. 

I have read the IRS pub 936 and have gone through Turbo Tax over and over to figure out which is the proper treatment for this case. 

TurboTax on the Mortgage Interest worksheet clearly says "only loans marked current on the home mortgage interest worksheet will appear in Part 1 of this form.  This is to prevent double counting of debt as part of the deductible loan limit calculation"  however, I can't find where the 1098 banks are marked or not marked "current".

There is only 1 current Mortgage and at all times during 2022 there was only 1 current Mortgage for the exact same property.

So what can I do to stop TurboTax from combining them? 

[PatriciaV]

The current form question is buried in another question on the Home Mortgage Interest Worksheet on Line A of the Smart Worksheet. If you check the box for "most recent", the "No" box is checked on the Smart Worksheet for "Loan refinanced in 20XX with a new 1098? (not most recent 1098)"

Since TurboTax does not handle overlapping mortgages well, you may wish to complete the calculation of allowable interest yourself and enter an adjusted interest amount when prompted. Be sure you keep these calculations with your other tax documents in case you need to document the interest deduction.

The necessary calculations are outlined in IRS Pub 936, Table 1. The lines referred to below come from Table 1. This table is duplicated in TurboTax forms as the Deductible Home Mortgage Interest Worksheet (Ded Home Mort).

Publication 936 provides several methods to calculate/determine your average loan balance for a loan.

Once you have calculated the average loan balances for each loan separately (lines 2 and 7), add the averages together for the total average loan balance (B) (line 12).

Divide your loan limit (line 11) by the total average loan balance (line 12) to get a ratio (A/B) (line 14).  That ratio is multiplied by the total amount of interest paid (line 13) as shown on your Forms 1098 to arrive at the deductible portion (line 15).

When your mortgage interest is being limited, TurboTax displays this message and provides an "Adjustment" box for you to enter your calculated interest deduction. See a screenshot of this page below.