First, both mortgage interest paid and real estate taxes paid are itemized deductions. You typically are only using itemized deductions when they exceed your standard deduction based on your filing status. Once you have entered all of your potential deductions TurboTax will let you know whether the standard or itemization is best for you.
Assuming you are itemizing, the $10K cap is on the itemized deduction for state/local taxes paid which includes real estate taxes but not mortgage interest. No. If your itemized deduction for state/local taxes is limited to $10k for a tax year there is no carryover.
The itemized deduction for mortgage interest paid may be limited due to the amount of your outstanding average loan amount in the tax year. Which loans are limited is determined by the loan origination date.
- For loans originated before Oct 1987 there is no interest limitation.
- For loans after Oct 1987 but before Dec 2017 loans with balances over $1M will have the interest deduction limited.
- For loans after Dec 2017 those with balances over $750,000 will have the interest deduction limited.
Again there is no carryover of the interest that has been limited.
If based on your form 1098 entries, TurboTax determines that your mortgage interest has been limited' you will notified and given an option with some instruction to calculate your mortgage interest deduction yourself. There are several mortgage interest situations that TurboTax does not handle. You will be able to enter your calculated amount as an adjusted amount.
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