Is the way Turbo Tax calculating mortgage interest deduction wrong?

[user17742511250]

Long story short.
I asked AI

"if two people are on a mortgage loan of 1.1m, how much itemized deduction does each person get since the loan is more 750k"

Two people on a $1.1M mortgage

If you split everything 50/50:

• Total loan: $1.1M
• Each person’s share: $550k

 Since $550k < $750k limit:

• Each person can deduct 100% of the interest they personally pai
  

Turbo Tax seems to prorate it based off of 750k, even though all of my interest is deductible. 

[TomK2023 · Accepted solution]

In 2015, the Ninth Circuit Court of Appeals ruled in Voss v. Commissioner that for unmarried co-owners, the mortgage limit applies per taxpayer, NOT per residence (IRS's "Action on Decision" (AOD 2016-02) follows this ruling).

The $750k limit is true for married couples, but false for your scenario.

Enter Mortgage Interest (non-married couples):

1. Open or continue your return.
2. Enter only your share of the mortgage interest from the 1098 that you paid (not the entire amount... the program will see a $550k loan, compare it to the $750k limit, see that you are under the limit, and allow 100% of the interest you entered.

The IRS may notice a difference between the 1098 issued by the bank (showing the full $1.1M and probably only one person's SSN), so you should report your share as described above.

If you are NOT the one who received the 1098, you should enter it in the "Interest not reported on a 1098" section. of the program (include the name and SSN of the person who actually received the form).

[user17742511250]

1. Enter only your share of the mortgage interest from the 1098 that you paid (not the entire amount... the program will see a $550k loan, compare it to the $750k limit, see that you are under the limit, and allow 100% of the interest you entered.

It's not doing that right now...it prorates the 1098 amount instead and seeing the full loan.