1098 Interest Limitations

Forum|Forum|3 years ago
March 21, 2023
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I have two 1098 forms. One for a coop on which the loan originated in 2016 and the balance is now $37943 in 2022 and the interest amount is $1420. I get a 1098 for my share of this loan. The other loan is when I purchased a unit in this coop in July 2021 for $750,000 and my interest amount for 2022 is around $24,000. My questions are:

Isn't the $1420 on the coop loan fully deductible since it has an original loan date that was in 2016 and falls under the $1M loan limit? The other $750,000 loan is after the December 2017 so it is limited to interest on the $750,000 amount but wouldn't the interest on this $750,000 loan be fully deductible since I am under the $750,000 limit?

The turbo tax software seems to be adding both loans for a total of $787,943 and limiting it to the $750,000 so it is reducing the interest to a percentage when dividing $750,000 limitation by $787,943.

Wouldn't I be able to deduct the total interest from my 1098's of $1420 and $24,000?

If so, how would I enter into Turbo Tax to be able to get the full interest deductions and reduced limits?

Not A Product Question

Christine GAuthor

I may have a solution to this problem. Why don't I not include the outstanding loan balance in Turbo tax for the coop loan since it is not my personal loan but the coop's loan but I can still deduct the interest on the loan since I paid it. Then my only loan outstanding will be my personal mortgage loan of $750,000 which will be right at the limit for full interest deduction.

Wouldn't this be a correct solution?

RobertB4444

Because the co-op loan originated in 2016 this will solve the problem for you.

@Christine G

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dubbytaxes

I have a similar situation, but my 2nd property isn't a co-op. it's just a secondary house.

Primary house i bought in 2021 has $1M left as principal, so I can only deduct $750,000 worth of interest for this property.

I have a secondary house I bought in 2015, which has $500,000 as principal. I refinanced it in 2020 for the same amount of principal (not a cash out).

So I should be able to also deduct $250,000 worth of mortgage interest for the secondary house right?

$1M (before 2017 secondary house) minus $750,000 (2021 primary house) = $250,000

The turbotax software is limiting it to just the $750,000 for the primary house.