750K debt mortgage interest limitation question

Forum|Forum|3 years ago
March 30, 2023
1 reply
25 views

The MFJ taxpayer purchased a home 903k in 2022. He also has a second home 318k purchased in 2016. Originally, I thought that the 750k debt mortgage interest limitation is per home, but seem, this is per total per taxpayer, correct?

Seems, when I enter both loans in the deductible home mortgage interest worksheet, the system combines them both to 1.2M, then applies the limitation percentage. Does that sound right? Am I missing something?

ProSeries Professional

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sjrcpa

Level 15

In general it is correct, but for home purchased in 2022 the loan wasn't outstanding all year so that's too high.

Use average monthly balances. The software should have input fields for number of months outstanding.

The more I know the more I don’t know.

G

Grateful2002Author

Level 3

It does have the input for months loan outstanding and it calculates as 7 months after I input the mortgage origination date.

But then I have to enter beginning of the year balance, which would be what? I entered as zero. And then its asking for borrowed in 2022. I entered as 903k. I have to enter amount of debt used to buy. I entered 903k. Then it flows to "average" as 903k as well. The escrow statement is showing purchase price as 903k. And the 1098 is showing outstanding balance as 903k as well. And it does calculate as 903K. It does not account for the 7 months outstanding in the calculation, seems. So am I doing something wrong?

sjrcpa

Level 15

Yes.

Think about it. Interest on the first loan is deductible in full for the months before buying the new home.

After that, interest on $750K mortgage debt is deductible.

Do a spreadsheet, work it out with a pencil.

The more I know the more I don’t know.

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