Mortgage interest deduction less than mortgage interest paid

Forum|Forum|1 year ago
April 6, 2025
2 replies
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I have a rental property, and I noticed when reviewing my federal return that the amount of mortgage interest deducted is quite a bit less than the amount of mortgage interest I paid during the year (~$18K deducted vs ~$37k paid). I've itemized my deductions so I'm not sure why there's such a large difference. My loan is above $750K but only by about $50K, so I don't think that should be the reason for the large difference?

I do have a slightly more complex situation with this rental where I rented out a few rooms while I was living there from Jan - April, then rented out the entire home starting in May, but I don't think that should affect the mortgage deduction? I also have 2 separate 1098s this year as my mortgage was transferred to another lender but one 1098 is for ~$34K and the other is for ~$3K, not sure if this has anything to do with this either?

TurboTax Premier Online

AnnetteB6

Go through the Property Profile section for your rental and double check the entries you have made for personal use days. For the period of time that you rented a part of your home, you should not have any personal use days unless you used the rented portion of the home personally. For the period of time that you rented the entire home, there should also be no personal use days because they would only count if you used the home personally after it was converted to be a rental property.

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jummusAuthor

I doubled checked and I have it set to 0 personal use days for the period I rented the entire home, and for the period I rented part of the house it's set to "rented every single day in 2024"

mglauner

In the Rental section, if you choose 'Let Us Calculate Expense Deductions for You', enter your Mortgage Interest and Property Tax here first. When you choose a % for part of home rented, TurboTax will put the correct amount for the rental and transfer the balance to your Schedule A. You'll have to enter the whole house amounts for other items, like utilities, insurance, etc. since they will all be allocated too.

Since you had both a 'part of home' and 'full home' rental situation, you could set up two different rentals for reporting this. If you indicate 'stopped renting (date)' for the part-year and 'begin date' for the whole house period, there won't be a conflict.

When you enter the Mortgage Interest in the Rental section, total your two 1098's. You won't need to make separate 1098 entries for Schedule A, since TurboTax will enter the amount for you from your rental entries. You can delete your 1098 entries in the itemized deduction section.

If you're using TurboTax Online, clear your Cache and Cookies after deleting the 1098's, before entering Mortgage Interest/Property Tax in the rental section if electing TurboTax to calculate the %.

@jummus