Why is this issue not resolved for California 540? I have a feeling that some low level IT support guys at TT simply don't understand the math behind this situation and keep closing it, without passing it to someone more competent. So much discussion on an obvious issue without any resolution, it's really silly.
As an example, let's assume a total mortage of around 1.5M via two original loans (1st and 2nd loans) that get consolidated/refinanced to a 3rd loan.
Loan 1 beginning of year balance: 800K (ending balance in June is $0, after Loan 3 refinancing)
Loan 2 beginning of year balance: 700K (ending balance in June is $0, after Loan 3 refinancing)
Above Loan 1 and Loan 2 add up to 1.5M total.
Loan 3 refinances both loans 1 and 2, into a single mortgage worth 1.5M around June of the year, where at the end of year in Dec, loan 3 is worth around 1.4M let's say after some payoff of principle.
TT in the Deductible Home Mortgage Interest Worksheet essentially does this:
Loan 1 average: (800K + 0) / 2 = 400K
Loan 2 average: (700K + 0) / 2 = 350K
Loan 3 average: (1.5M + 1.4M) / 2 = 1.45M
So, while the total mortage(s) at ANY point in time never exceeds 1.5M, the "Average balance of all home acquisition debt" is calculated to be 400K + 350K + 1.45M = 2.2M.. It's utterly ridiculous. How can the "average" be greater than the absolute max value during the year of 1.5M? TT never considers the fact that Loan 3 replaces the other 2 loans and they never co-exist.. Guys seriously. Get your act together. This is basic stuff.
I'm still stuck...
At the review/smart check stage, I'm being asked to fix an error:
"Check for Entry"
"Deductible Home Mortgage Interest Wks: Fair market value of home must be entered."
"Fair market value of home (box)."
What do I put there? I've never had to manually enter an amount. How do I calculate the amount?
- I have one mortgage and one home equity loan