help with mortgage interest limit

Forum|Forum|5 years ago
April 8, 2021
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i need help to understand the average mortgage balance calculation. the 1mil/750000 cap is easy to understand but not how to calculate the average (or im not understanding).

We moved twice last year, selling first our property in VA in april and then our FL house in November and moving inbetween to our current home. mortgage balanced was as follows :

	jan	feb	mar	april	may	jun	jul	aug	sep	oct	nov	dec
house 1. sold april15th	329000	328000	327000	326000
house 2. sold nov 15th	303000	302500	302000	301500	301000	300500	300000	299500	299000	298500	298000
house 3. bought sep 1st									510000	509124	508247	507367

when entering my 1098s with TT it tells me to take standard deduction despite my interest > 18000$ and capped at the 10000$ state taxes.... what it looks like its doing it adding up the loan balance to > 1.13mil and reducing effect of the interest to ~ 65% making standard deduction better but is this really right?.

pub 936 got me more confused honestly...

if i do the math by hand i get an average of 554 but am i doing it right? below how i sum up the monthly balances and average it out :

	jan	feb	mar	april	may	jun	jul	aug	sep	oct	nov	dec
house 1. sold april15th	329000	328000	327000	326000
house 2. sold nov 15th	303000	302500	302000	301500	301000	300500	300000	299500	299000	298500	298000
house 3. bought sep 1st									510000	509124	508247	507367

balance	jan	feb	mar	april	may	jun	jul	aug	sep	oct	nov	dec	avg
balance sum	632000	630500	629000	627500	301000	300500	300000	299500	809000	807624	806247	507367	554186.5

so i get average of 554186.5 and think i should be able to deduct the full mortgage interest.
am i wrong, or is TT doing the math wrong for me?

TurboTax Premier Online

Best answer by NCPERSON1

see if this post helps....someone else had a similar question earlier tonight

https://ttlc.intuit.com/community/tax-credits-deductions/discussion/re-deductible-home-mortgage-interest-with-multiple-homes/01/2181157#M204077

your 12 point average is the way to go.... i try to explain the Mr. Blue example in pub 536......

just take the interest on each mortgage and divide back by its respective interest rate... do not adjust for the number of months the mortgage was outstanding. THAT is the balance you use as the 'average balance' for each loan - you should get a result that is very similar to how you laid out the 12 point average

NCPERSON1Answer

see if this post helps....someone else had a similar question earlier tonight

https://ttlc.intuit.com/community/tax-credits-deductions/discussion/re-deductible-home-mortgage-interest-with-multiple-homes/01/2181157#M204077

your 12 point average is the way to go.... i try to explain the Mr. Blue example in pub 536......

ineedhelp2021Author

thank you, this made me understand it, now i just have to figure out how to get TT to accept this. it looks like i need to zero out box 2 for each of the 1098's where the loan has been paid off for it to calculate correctly....