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Level 1
posted Jan 24, 2021 8:44:25 PM

Turbo Tax is calculating my mortgage interest deduction incorrectly. Married filing jointly - so I can take mortgage deduction via itemized decution up to a loan of 750K.

I refinanced a loan of 850K. Paid interest as 23K with original mortgage and 5K with refinanced mortgage. Avg Loan amount for the year = 859K I calculated a factor of 87%. Interest allowed for deduction should be 24K, whereas Turbo tax shows 12K as deduction. It's wrong. It's treating the refinance as a second loan, I think!

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1 Replies
Expert Alumni
Jan 27, 2021 4:59:39 PM

It depends.  If you refinanced the loan and used the money exclusively for the home such as remodel or home improvement, then home mortgage interest on your refinanced home loan would be fully deductible.  Based on your question, you may revisit your account and re-check your answers.

 

Here are the steps that may help your situation:

  1. Login to Turbo Tax.
  2. Under Federal Taxes, in Deduction and Credit tab, click "I'll choose what I work on".
  3. Under " Your 2020 Deduction and Credit", click update or start next to Mortgage Interest, Refinancing, and Insurance.
  4. Under " Home Loan deduction summary" click edit  and enter the lender's information, one at a time.
  5. Click continue until you get to the screen " Is this loan secured by a property of yours?" 
  6. Click Done.
  7. The next screen is a question " Do any of the situation apply to you?". Your answer here will determine if your loan exceeded the allowed loan amount.