Mortgage Interest Limitation Calculation when purchased a second home in midyear

Forum|Forum|3 years ago
February 23, 2023
1 reply
5 views

Let us take this simplified example:

Taxpayer had a mortgage with principal amount 650K through out 1/1/2022 to 12/31/2022 (assuming interest only payment), the interest amount is 30K. He bought a second home from 10/1/2022, and had a mortgage with principal 350K through the rest of year, the interest amount is 20K for the year.

In theory:

- Can you please write the formula to calculate the deductible mortgage interest for the year assuming 750K limitation?
- Assuming this person is in California, do you have a way to provide the federally not allowed portion to California?

In practice, how do you input the data in ProConnect software to get the correct answers for federal and California consistent with what you calculated in theory by hand?

PS: Please read my signature and vote for my idea. I cannot get an answer from support and they cannot open a case for me, if we push the idea to the top, it will get their attention. Thanks.

ProConnect Tax

This topic has been closed for replies.

Intuitjhaze

Level 5

hi again @puravidapto thanks for reaching out! please be on the lookout for a private message notification so we can discuss your issue more in-depth! chat soon.

puravidaptoAuthor

Level 7

@Intuitjhaze Just to make it clear, I know the "in theory" and correct answer is for this question, and I believe most of the practitioners know the correct answer. My main question is how to get the software to produce the answer.

I phrased the question this way is to have people compare their "should be" answer with their "software" answer themselves. However, I can simplify the question as:

The correct answer for federal is:

Full $30k mortgage interest on the $650k - primary residence +
Interest of $100k/$350k * $20k for deductible interest on the second home

all $50k mortgage interest would be allowed for California

How do I get the software to get the correct answer? I did try the "Excess Mortgage Interest" input, which does not provide the correct answer.

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