Hello TurboTax Community,
I'm using TurboTax to file my 2023 taxes and have a few questions about correctly entering mortgage interest deductions for two properties (second one acquired during the year).
Here's my situation:
Total Deductible Interest:
Mortgage-A: $16,197
Mortgage-B: $8,854.71
Total = $25,051.71
TurboTax Adjustments:
Questions:
I want to ensure I'm claiming the right deduction and using TurboTax correctly. Any guidance would be greatly appreciated! Thank you!
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I'm going to page Champ @Mike9241 for this. Check back later.
nope. you are in essence deducting interest on about 1.2 M in mortgage debt when your cap is $750K
see IRS pub 936 table 1. the cap applies to total mortgage debt. there is no separate limit for pre and post
see line 11 of deductible home mortgage interest worksheet
put another way say your pre12/15/2017 average loan balance was $1,000,000
and post average loan balance was $750,000
under your method you would be deducting interest on 1,750,000
also, no basis for adding in the over $4K in interest that wasn't actually paid. using the average monthly loan balance because is higher than the overall average will automatically give you a higher deduction. you can't count the time this mortgage didn't exist
what do I think the proper deduction should be - assuming average monthly mortgage balances computed correctly
750,000/ (523709 {assumes monthly average to be consistent with the other} +1040946) * (16197+12295+418)
this should be consistent with the results using table 1 in the IRS PUB and with proper input into Turbotax
i tried both and they both came up with the virtually the same amount ($1 rounding difference)
Thank you for your response and assistance! I’m starting to understand this deduction better now, as well as Table 1. However, I’ve noticed a discrepancy in TurboTax when entering these numbers. I forgot to mention that Mortgage A was refinanced in 2021 and that appears to be affecting things...
On the Deductible Home Mortgage Interest Worksheet — Part 2, Qualified Loan Limit — Line 2 is left blank, which results in a different value on Line 12 of $1,041,350, and an amount of $20,520 on line 22 (Sched A). The value changes depending on whether I select “Yes” or “No” to the question, “Was this loan the result of refinancing a previous loan?”. Is this a bug in TurboTax? Why would TurboTax not be including loan A if its a refinance?
Also, you mentioned that I should add the $418 prepaid interest, but where exactly should I input that? In the total interest not reported on Form 1098 section?
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