Mortgage Interest

[jamiejacques]

We relocated and sold our primary house in California on 07/03/2019 (House in California was purchased on 07/2007) this loan was paid off with the sale of the house. The loan amount was 360,000

Then on 08/30/2019 due to work relocation, we purchase a house in Massachusetts, a loan amount of $500,000. For this property in Massachusetts, we have received 2 1098 forms because the loan was sold immediately to another bank with a new mortgage balance of 499,246.00. The original bank 

Question 1. Do I have Have to limit the mortgage interest?

Question 2. Turbo Tax is taking as if I have outstanding loans in the amount of $999,246.00, how do I make turbo tax understand that is the same loan for the same property for the federal and also for the state of massachussets.

[NCperson]

question 1: no - it's the AVERAGE balance for the year that has to exceed $750,000 for there to be limitations on the interest. 

you had a 12 month average of approximately

jan: 360

feb:360

Mar: 360

Apr: 360

May:360

June: 360

July: 0

aug: 0

Sept - Dec: 500 each month

so the average is well below $750k

I suspect you answered one of the questions wrong on the 1098. Please go back and review closely. 

you really have 3 1098's right (1 from the old loan and 2 from the new loan).  if you want to reduce the 'head banging, just take the 2 from the new mortgage and consider them as one 1098.  the servicing sale does make it confusing.  it won't change the outcome - all the interest should be deductible, 

[jamiejacques]

Thank you so much