1098 Mortgage Intrest and Point Deduction

Forum|Forum|3 years ago
February 17, 2023
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Im filling my state taxes and the title of the page im on says your mortgage interest and point deduction

" A summary of your home mortgage interest and point deduction is shown below. We have calculated your adjustment based on California rules, which may allow for a greater deduction than that on your federal return.

Mortgage interest and points on form 1098 California deductions 5,447"

But on my 1098 in box 1 (mortgage interest received from payer) the number is higher than what was calculated. Should the number in box 1 on my 1098 match the california deductions?

DMarkM1

It depends. The IRS limits the mortgage interest deduction on loans with average balances over 750K if taken out after Dec 2017. CA however doesn't limit the deduction until average loan balances are over $1M. Since the deduction showing is less than the box 1 interest, It would appear your average loan balance was over $1M so CA limited your interest deduction.

If your average mortgage loan balance was $1M or less then the box 1 amount should match the CA interest deduction.

However, if the average loan balance was over 1M then the CA interest deduction will be less. For example, your average loan balance was 1.5M and your box 1 amount is 6000. The math generally would be:

1M/1.5M = .6667 .6667 x 6000 = 4000 CA interest deduction.

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