Refinanced mortgage 1098 messing up deduction from original loan

[AmyC]

Correct, since you meet the exception to the rule, you must enter the date of the original loan in order to qualify with a refinance over$750,000.

See About Publication 936, Home Mortgage Interest Deduction for more information.

@MK1996

[MK1996]

Isn't this strange...Entering data different from the 1098 provided to me for my current lender?  Shouldn't turbotax have a work around that allows you to report the entry of Line 3 (Mortgage origination date) on your most recent 1098 and still account for the fact that since you acquired the home prior to 2017?  I wonder how many people who just follow the TurboTax prompts are being cheated of their rightful deductions due to this glitch...

Thank you for your kind reply.

[42Amy1]

Limited Mortgage Interest Deduction:

I've been struggling with this same issue since a 2020 cash-out refinance  loan that was refinanced prior to a 12-2017 refinance (also cash-out but under $1m).  (all balance was Home Acquisition Debt) The Mortgage Interest form to calculate this on TurboTax remains a mess and incapable of doing the calculations. It was so awful back in 2020, I abandoned the Deductible Mortgage Interest form, did the calculations myself using Pub 936 and typed it into Schedule A, Mortgage interest myself (I had to override the interest paid from 1098)
I took the pre-2017 loan payoff at refi in 2020 as the (deductible portion of interest on up to $1m deductibility). Use beginning of year and end of year (2023) balances to find Average balance.

2023 Beg + End balance / 2 = Average balance .   Divide your Qualified Loan Limit (100% Home AcquisitionDebt that was deductible up to $750kl / by Average Mtg balance = a three digit fraction   (0.xxx )

0.xxx  X 1098 Interest paid = your Deductible portion of Mtg Interest. 

Unfortunately, I just discovered that when I abandoned the home mtg interest form on TurboTax some very wrong numbers remained on the form to flow over to my 2021 State return which may have denied me a much higher interest deduction there, so I now have to amend that State return!!!  Thanks a lot TurboTax.
Make sure you don't deduct interest on any portion of Mortgage balance that is not 100% used to buy, build, improve your home.  

Read Pub 936 thoroughly and use the Table 1 worksheet to figure your Qualified Loan Limit.

[42Amy1]

Sadly the same issue going on since my 2020 return.

See Pub 936 to find deductible portion....!  Still trying to figure out a workaround. before I just override the 1098 Interest paid that flowed to Schedule A, but leaving the doubled loan balance on the Mortgage Interest Deduction form (useless) was a huge mistake I only just discovered that flowed over to my State return. :(((

[42Amy1]

please let us know if you get a refund and, next problem where to go to do taxes.

[42Amy1]

Same issue for at least three years.  

Why doesn't Turbo Tax FIX the issue by allowing the user to type in the correct numbers:  

1098 Interest paid

Average Loan balance

Qualified Loan Limit (figure from Pub 936 Table 1)

fraction:   Qualified Loan limit/ Average Loan Balance = Fraction:  0.xxx

0.xxx.  x  1098 Int. Paid.  = Deductible Interest

It shouldn't have taken 3 years to fix this.  

Just change it to a table that user can type into. How many IT's here could do this?

[AmyC]

You can make just one 1098 entry that is all of the correct information for the program to flow through to the Sch A. The worksheet for 1098 calculation is not part of your return. No override required but all of your smarts. Very impressive!

@42Amy1 

[zomboo]

If I understand your question is why you are not receiving the $1M limit for a 2020 refi of a pre-2017 mortgage. It is simply because the 2020 refi is a new and separate mortgage in the $750K limit category.