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mortgage interest limitation

three loans in effect on two different houses.  

1.  Principal residence.  purchased with friend prior to 12/2017.  avg balance approximates 600 K (not actual).  We are both  on 1098 statement with my ss number identified and both responsible for loan.  

2.  I individually purchased a second home in 2023 (not rented).  avg bal approximates 200k.  This loan was sold by bank to another bank immediately after closing so only payments to original bank was interest  paid on settlement statement.  I did however get a 1098 from original bank. showing this amount and amount of interest paid. which was equal to settlement statement.  

3.  the mortgage for the home I purchased in 2 above was bought by bank and therefore no further money is owed to original bank .  this average balance approximates 190K,  

Given the scenario above, can I ignore item 2 since 0 dollars are owed and only consider items 1 and 3 when determining the 750k interest allowance?  AND do I use the 600k or 300k to plug into worksheet to understand if there are limitations?  If I can use the 300k, I can avoid limitations.  HELP!!!! Thanks in advance.  

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1 Reply

mortgage interest limitation

To figure the total average mortgage balance, use 1/2 of the average balance for the home purchased with your friend prior to 12/2017. You just have to figure out how to get Turbo Tax to calculate 1/2 of the average balance. Your mortgage deduction should not be limited.

 

For the second home, you need to enter the 1098's for both banks in the order received because you can't just ignore it and you want to claim all interest paid. For the first 1098, be sure to select 'Not the latest 1098' box that shows up after the 1098 info and selecting Done. For the second 1098, select 'This the latest 1098'.

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