Does turbotax adjust mortgage interest automatically if loan amount is more that IRS limit of 750k or 1M depending upon property purchase date?

[HelenC12]

Yes, TurboTax adjusts the mortgage interest amount based on the loan acquisition date.  

• The debt can’t exceed $750,000 (or $1,000,000 if the loan was taken before December 16, 2017) to get the full deduction.

After you enter your 1098 in TurboTax, we'll ask a series of follow-up questions to make sure you're qualified to take the deduction.

For tax years 2018 through 2025, you can only deduct the interest from the amount of your loan that was used to buy, build, or improve the home that it’s secured by.

The IRS lets you deduct your mortgage interest, but only if you itemize deductions. You can't deduct the principal (the borrowed money you're paying back).

[RKA1947]

Thank you for your response. 

I am itemizing. To verify if interest amount get adjusted I tried increasing loan amount to $2.5M and also reducing it below $1M but it didn't make any difference to interest deduction, in all cases it is deducting entire interest. 

Thanks

Rahul 

[JulieS]

How are you determining the amount of the interest deduction allowed by the program?

I tried this too and I noticed two things. The adjustment doesn't calculate until you get to the end of the section and the full amount still shows on the Home loan deduction summary (shown below).

If you want to "test" the program, you need to continue through the entire section and then check the deduction showing on Schedule A to know if it is working as it should. 

[JulieS]

[RKA1947]

I finished both Federal and State returns. Payment and e-file is pending resolution to this problem.

On completing Fedral, Turbotax shows total itemized deduction and it's breakdown.

Mortgage interest deducted is always full amount I paid regardless of the loan amount (I tried 500k, 1.2M and 2.2M) and hence the total itemized deduction

[idemingo]

Hi, I am having the same problem. I am printing the form before filing and Turbotax is not adjusting my mortgage interest automatically on my loan either. The amount is more that IRS limit of 750k but TurboTax is including the full amount.

@RKA1947 Did you get any resolution from TurboTax?

@JulieS @HelenC12 Is this something you could help with?

[RaifH]

TurboTax will adjust the deductible mortgage if your outstanding mortgage principal exceeds $750,000 on homes purchased after December 15, 2017, or $1 million on homes purchased before that, even if you have refinanced since then. If the limit is not being applied to your mortgage, check your answer to Let's see if this is the most recent form for this loan. TurboTax only calculates the limit based on loans currently outstanding. 

If that does not seem to be the issue, you can try deleting Form 1098 and re-entering it. 

[idemingo]

Thank you! Thank worked!

[Anonymous]

Is it me or did TT used to ask you adjust the amount down to the deductible portion? For 2022 it's doing an auto-adjustment (which is wrong in my case).

I opened up my 2020 return and it has follow up questions based on the date and outstanding amount.

However in 2021 I checked the "The interest amount I entered is different than what's on our 1098" box and entered the adjusted amounts directly. I checked that the Schedule A form was outputted correctly.

[Mike9241]

if you enter accurate data for the mortgage, Turbotax will automatically compute any interest limitation

[Anonymous]

That’s really not possible with the information given to it. (One loan for sold home only active for part of the year, so it affects the total balance across both mortgages and therefore the deductible portion month to month—see IRS worksheet on the subject).

I’m fine with TurboTax trying to do this for the common case, but it needs to be more apparent that it’s reducing the deduction on my behalf. (Without having to look at the filled out return.) And there needs to be a way to simply override it without playing games with the inputted 1098 values.