Question

Why is my mortgage interest being limited?

Forum|Forum|1 year ago
March 23, 2025
1 reply
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My primary home was purchased in 2021 with a current loan balance of about 613k. My second home was purchased in 2010 with a current loan balance of about 262k. Both loans from the two separate properties combined is less than $1M. Why is my total 1098 interest deduction calculated and capped at $20,640 when I paid much more than that in interest combined?

TurboTax Home & Biz Windows

Z

zomboo

The mortgage interest deduction is limited to $750K for 2024, not $1M. If the balances you provided are the averages, your interest deduction is limited to $750K/$875K = 85.7% of the interest you paid.

L

lostone2Author

I thought that IRS Publication 936 says that mortgage interest from indebtness incurred before December 16, 2017 is subject to the higher limit of 1M? Wouldn't my second home with the original loan be subjected to the higher limit while the primary home with loan indebtness incurred 2021 be at the 750k limit?

Z

zomboo

Yes, you are correct. I missed that detail in my response. Let's see if I can get this right. The interest on your second home is subject to the $1M and is fully deductible. However it reduces the $750K limit on the primary home by $262K. So the interest on the primary is limited to ($750K-$262)/$613 = 79.6%.