unable to take full mortgage interest deduction for loan bellow 750k

[LO42]

Hi community, I have a situation with Turbotax 2024 where a second home mortgage interest deduction is less than allowed limit by IRS for filing jointly on loans after 2017 being less than $750k.

Here is my example.

Second home purchased with loan origination with Bank A on 11/30/2023, for $726200, interest paid $82529.93, reported on form 1098 issued for CY 2024.

Refinanced with Bank B on 01/24/2024 for $712000 (covered the difference on my own), interest paid $1092.4, reported on form 1098 issued for CY 2024.

Loan sold to Bank C on 03/01/2024, interest paid $41377.73, reported on form 1098 issued for CY2024.

If I add these up, I should be able to deduct $50,730.06. 

Just Turbotax recalculates my mortgage interest as "limited" to $26,630.0, and no explanation. I checked all the answers as second mortgage, secured by property and so on, the only odd thing, since I have 3 lenders, is asking for each one when did I purchased the home, even if I selected "refinanced" for the Bank B and C, plus checked the box on "acquisition" on bank C. It seems to me is a bug in their math, anyone experiencing similar situation?

[MindyB]

You should report the Box 2 - Outstanding mortgage principal as zero for the first two 1098s in your example. This should correct the error and allow the mortgage to be deductible- assuming you have no mortgage on your first home.  The $750,000 limitation does include both primary and secondary homes together, not individually. 

Here is some more information: Deducting Mortgage Interest FAQs

[Mike9241]

do you have a mortgage on your primary residence?

[zomboo]

Did you enter your1098's in the order of origination and specify the following for each 1098:

Loan A: Is Not a refinance of a prior loan, Was refinanced or sold in 2024 and Not the most recent 1098.

Loan B: Is a refinance of a prior loan, Was refinanced or sold in 2024 and Not the most recent 1098.

Loan C: Is Not a refinance of a prior loan, Was Not refinanced or sold in 2024 and Is the most recent 1098.

The 1098's for loans B and C should have the same origination date in Box 3.

[LO42]

Thank you, the "latest form" was the issue, because Torbotax makes it sound like latest related to correction of the form, instead of as last in the order of events.