Question

Mortgage Interest Deduction

Forum|Forum|4 years ago
April 18, 2022
1 reply
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In 2021 I sold my primary home in June which had a balance of $595k having paid $10.5k in interest. A few weeks later, I purchased a new primary home with a $931k mortgage and paid $11.9k in interest. This seems like the most common scenario for most Americans, that is, selling one home and purchasing another. Unfortunately, Publication 936 seems to deal mostly with second homes owned simultaneously. What is the proper way to 1) calculate the total mortage interest deduction that applies to me for the year, and, 2) how can this be entered into turbo tax?

TurboTax Premier Online

R

RaifH

TurboTax uses only the mortgage principal on outstanding loans to determine your deductible mortgage interest limit.

To enter this in TurboTax, you will want to enter both loans as being secured by your primary home. When TurboTax asks Let's see if this is the most recent form for this loan, answer No for your old home and Yes for your new one.

Your entire interest paid is deductible for your old home, and about 75/93 of the $11,900 in interest you paid on your new home should be deductible, whatever that works out to be.