You'll need to sign in or create an account to connect with an expert.
The IRS has just posted a draft version of Publication 936, Home Mortgage Interest Deduction for tax year 2020.
The publication is dated Nov 23, 2020.
On page 10 it states:
"Refinanced Home acquisition debt. Any secured debt you use to refinance home acquisition debt is treated as home acquisition debt.However, the new debt will qualify as home acquisition debt only up to the amount of the balance of the old mortgage principal just before refinancing. ..."
In my case the closing principal on my original 2016 mortgage was $920,188 (as of 11/20/20). My refinanced mortgage was for less, $765,000.
The limit on mortgage interest deduction for loans between1987-2017 was $1,000,000. After 2017, the limit was changed to $750,000. I believe that the $1,000,000 limit still applies to my 2020 loan because it was a refinance of the original loan. Thus all of the interest from both loans should be deductible.
The direct entry tip doesn't work with MacOS. The cells in the DED HOME MORT worksheet are locked.
BTW, if you calculate the average loan balance outside of TT and are under all the limits, you can enter a penny in each EOP loan balance cell in the U/I and it then lets one tabulate the interest paid without reduction. (TT doesn't accept a zero value) - In my cause that works until TT has this fixed or I am ready to file. I don't need a complicated calc engine behind the scenes in my case, but by entering any loan values, those amounts end up getting doubled, throwing the average off and limiting my interest deduction.
Technical is working on it. please go here to receive email notifications when any updates related to this issue become available.
New: retroactive for 2018 and 2019 also, MIP is deductible again. Mortgage Insurance Premiums, see Changes to the Deductibility of Mortgage Insurance Premiums (MIP) | Internal Revenue Service (irs.go...
We definitely need a way to enter our average mortgage balance amount. TurboTax seems to be computing a balance based on the amount in the 1098, but even when it does that, the program does not input the reduced amount into the 1040. On my Mac, it won’t even let me manually change the data in the underlying worksheet. I hope this gets fixed quickly.
Some TurboTax customers are experiencing an issue with their home mortgage average balance. This can cause the home mortgage interest to be incorrectly limited. This may be affecting your tax return.
Please sign up for email notifications when an update related to this issue is available here.
See also this TurboTax Help.
@HoJo1982 great idea! I just tweeted at them.
How do you access the worksheets? I'm having the same issue - refi in May on an initial mortgage originated in Dec of 2018....Entered in both, my refund swung one way. The program pulled up the worksheet and asked for a field entry which I accidentally hit enter on and it swung deeply in the other direction. It's not saying that I have $0 in mortgage interest which is FAR from the truth. Anyone have any thoughts/suggestions??
I did the same thing you did and was still shorted on my interest deduction after entering zeroes on the balance on 12/31/2020. Same scenario of owning two properties with one being refinanced and having two 1098s for one property. I think part of the problem is my refinance loan went into effect 5 days before my old loan was paid off. Regardless, I never actually owed for more than one property between the two 1098s. TT does just calculate the totals of all the mortgage balances which pushed me well over the $1 million mark short changing my total interest deduction. I concur TT needs to fix this.
If the loan was refinanced or moved to a different lender in 2020 and you have two 1098's to enter:
First, delete both 1098's if you started to enter them. Do NOT try to edit them.
Enter the older loan first, enter box 2 as it is reported,
THERE WILL BE A SCREEN ASKING "WAS THIS LOAN PAID OFF OR SOLD IN 2020?" CLICK "YES"
(this screen will not appear if you go back and edit)
Continue through the interview
Next, enter the second 1098
If box 2 is blank, enter zero, otherwise enter what is in box 2. DO NOT LEAVE IT BLANK
Continue through the interview questions. Do not select that it is a HELC.
Since you clicked that the first 1098 was paid off or refinanced with a different lender, the mortgage balances (box 2) will not be added together.
Some TurboTax customers are experiencing an issue with their home mortgage average balance. This can cause the home mortgage interest to be incorrectly limited. This may be affecting your tax return.
Please sign up for email notifications when an update related to this issue is available here.
See also this TurboTax Help.
Fantastic news - that does indeed sound promising! Thanks for the news about todays update too.
Thanks for the tip. Will try it. However, we could have done this ourselves if we are entering numbers different from what we received on 1098. TT is supposed to do these jobs for us, so we only need to enter what we receive. Still very disappointing.
I agree!
And what TT is asking us to do now would not be that difficult to program!
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
mpiseter
Level 1
slowreader
Level 4
9137421619
New Member
BobbyC777
Level 2
moscosamykaill
Returning Member
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.