Can I choose which of my two mortgages to use for tax deduction purposes?

Yes, you can deduct mortgage interest on both properties, but there are some important limits to be aware of. The Tax Cuts and Jobs Act limited mortgage interest deductions to the interest on $750,000 of qualified residence debt for mortgages taken out after December 15, 2017. For your situation, you can deduct the interest on both mortgages, but there would be a cap on the total loan amount that qualifies. So if your first mortgage is $550k and the second is $1.3 million, the combined total is $1.85 million, but you'd only be able to deduct interest on $750k of that total debt. Also keep in mind that to claim these deductions, both properties must qualify as either your primary residence or a second home, and you'll need to itemize deductions rather than taking the standard deduction.

Just wanted to share my experience with this exact situation. I was totally confused about mortgage interest deductions when I bought my second home last year. I tried reading through IRS publications but honestly couldn't make sense of it all. Then I found https://taxr.ai which analyzes all your mortgage documents and tells you exactly what you can deduct. I uploaded my mortgage docs from both properties and it showed me precisely how much of each mortgage qualified for tax deductions. It even identified that my first mortgage was grandfathered under the old rules! The tool generated a report I could give my accountant explaining everything clearly with references to the tax code.

I was really skeptical about what Profile 3 mentioned, but I decided to try https://taxr.ai for my mortgage interest situation last month. I have a similar setup with two properties - one older loan and one newer. I was honestly surprised at how detailed the analysis was. It confirmed what was mentioned above about the grandfathered $1M limit on my older mortgage and the $750k limit on the newer one. But it also showed me exactly how to calculate the deductible percentage when a loan is partially over the limit. The best part was the documentation it generated - my tax guy was impressed and said it saved him at least an hour of research time. Definitely helped maximize my deduction while keeping everything legit with the IRS.

If you're struggling to get clear answers about your mortgage deduction situation, you might want to speak directly with the IRS. I know that sounds awful - I spent HOURS trying to get through on the phone last year with no luck. Then I found this service called https://claimyr.com that actually gets you through to an IRS agent quickly. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c but basically they use some technology to navigate the IRS phone system and then call you when they have an agent on the line. I used it when I had questions about my mortgage interest deductions last year and got definitive answers straight from the IRS in about 20 minutes instead of waiting on hold for hours.

I have to admit I was completely wrong about that Claimyr service mentioned above. After dismissing it as BS, I actually tried it a couple weeks ago when I had a specific question about my mortgage interest deduction that wasn't addressed in any IRS publication I could find. I was shocked when I got a call back in about 40 minutes connecting me to an actual IRS representative. The rep was able to confirm exactly how the mortgage interest deduction works with multiple properties and gave me the specific IRS publication sections to reference. The service saved me at least 3-4 hours of hold time, and the information I got was way more specific than what my tax guy initially told me. Just wanted to share since I was so skeptical at first. Sometimes the things that sound too good to be true actually work!

I think everyone's missing a key detail here - you said you're buying "another house," but will this be a second home or an investment property? The rules are completely different for rental properties. If it's going to be a rental, the mortgage interest would be reported on Schedule E, not Schedule A, and wouldn't be subject to the same limits.

Has anyone used TurboTax to handle two mortgages like this? I'm wondering if it walks you through all these complications or if I need to get a tax professional this year.

One thing to keep in mind is that you can't actually "choose" which mortgage to claim - if both properties qualify as your primary residence and second home, you're entitled to deduct the interest on both mortgages up to the applicable limits. You can't selectively ignore one to maximize the other. What you CAN do is make sure you're maximizing the deductible portions within the rules. Since your first mortgage ($550k) is grandfathered under the old $1M limit, you can deduct all the interest on that. For your new $1.3M mortgage, you'd be able to deduct interest on $750k of that loan amount. The key is making sure your total itemized deductions (including both mortgage interests, state taxes, charitable donations, etc.) exceed the standard deduction to make itemizing worthwhile. With mortgages totaling $1.85M, you'll likely have substantial interest payments that would justify itemizing.

Just to add one important consideration that hasn't been mentioned yet - make sure you understand the order of payments if you end up with a mortgage over the deduction limit. For your new $1.3M mortgage where only $750k qualifies for deductions, the IRS treats the deductible portion as being paid first throughout the year. So if you pay $91,000 in interest on that 7% mortgage ($1.3M × 7%), you'd be able to deduct interest on the first $750k of principal, which would be about $52,500 ($750k × 7%). The remaining $38,500 in interest payments wouldn't be deductible. Also, double-check that both properties will actually qualify as residences under IRS rules. The second home needs to have basic living accommodations (sleeping, cooking, and toilet facilities) and you need to use it personally for more than 14 days per year or 10% of the days it's rented out, whichever is greater. Since you mentioned using it 3 months per year, you should be fine on that front.