Mortgage Interest

[kcesch]

I have a common issue that I don't think Turbo Tax is apt to handle. (shame on them).  I sold a house in July and bought a new one.  My mortage on the first one was 450,000 ($10,975 in interest) and the mortgage on the new one is 724,900 ($20,730 in interest).  Turbo tax is limiting my interest deduction because I am over the $750,000 threshold; however, I didnt have these mortgages at the same time!  If I am correct, I should be able to deduct the full interest from both loans.

450,000*6/12=$250,000

724900*6/12=$362,450

For a total of $612,450. Which is under the $750,000 threshold! Turbo tax says my mortgage interest deduction should be $20,956, but I believe it should be $31,705.....

Am I correct and if so, Turbo Tax needs to fix this issue immediately because tons of customers buy and sell homes during the same tax year!

[zomboo]

It appears that Turbo Tax is not aware that the first mortgage was paid off in 2023. When entering the 1098 data for the first mortgage, select the 'This loan was paid off or refinanced in 2023' box on the 'Tell us about this loan' screen. After entering both 1098's and selecting 'Done', you should be prompted to enter more payoff info. You will then get a chance to enter your own values if you disagree with Turbo Tax calculations. At least this is what I get using the desktop turbo tax.

In previous years, Turbo Tax calculated average balances differently than called out in Pub 936 resulting in a larger deduction in my case. I suspect it is the same this year so don't expect its result to match exactly with yours.

[PatriciaV]

After you enter both Forms 1098, continue on in that section until you see "Your mortgage is being limited." On this page, you can enter your interest calculation. This replaces the program calculation and reports the entry you make here. TurboTax provides this option because of situations like yours.

@kcesch