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lealj6
New Member

Using IRS936 Interest Paid/Interest Rate method, all mortgage interest is deductible. How do i "create placeholder 1098" recommended by TT with $1 outstanding balance?

Avg Balance using Interest Paid/Interest Rate 1 = $66867 (sold March 2022; primary home)
Avg Balance using IP/IR 2 = $150073 (purchased August 2005; secondary home)
Avg Balance using IP/IR 3 = $349664 (purchased April 2022; primary home)
IRS 936:
Line 1 =$0
Lines 2, 5, 6 = $150,073
Line 7 = $416,531
Lines 10, 11, 12 = $566,604
Per the form, Line 11 = Line 12 therefore all interest on mortgages included in Line 12 deductible on Schedule A.
TT says it uses Average First/Last Balance method so "create placeholder 1098 with $1 outstanding balance in box 2 and all mortgage interest in box 1". 
For "placeholder 1098", how do i answer: lender name, mortgage origination date, loan balance as of 01/01/2023, and when purchased property?? Also, do i include individual 1098s or just the one "placeholder 1098" by itself?
Thank you!
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1 Reply
PatriciaV
Expert Alumni

Using IRS936 Interest Paid/Interest Rate method, all mortgage interest is deductible. How do i "create placeholder 1098" recommended by TT with $1 outstanding balance?

It depends. You can enter all three 1098s (option 1) or just one (option 2).

 

While TurboTax uses the average of first and last mortgage balances, you may find a better result using one of the other average mortgage balance calculation methods mentioned in IRS Pub 936 under Average Mortgage Balance. This includes the Interest Rate method you have chosen to use.

 

Option 1: After you enter all three Forms 1098, if TurboTax finds your mortgage interest deduction is limited, you should be presented with a page that allows you to enter the total interest deduction you calculated. This overrides the amount calculated by TurboTax. 

 

Option 2: If you prefer to enter one 1098 instead, use the lender information for the most recent, active loan. Enter only one 1098 with the interest you have calculated. As long as you can prove your calculations, the other information on the 1098 is not relevant, or reported to the IRS.

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