Can I claim mortgage interest deduction for two homes with different purchase dates?

You're dealing with a situation that confuses a lot of homeowners! The mortgage interest deduction rules do depend on when your loans originated. For your primary residence purchased before 12/15/2017, you can deduct interest on up to $1 million of acquisition debt. For your second home purchased after that date, the limit is $750,000 of acquisition debt. The good news is these limits apply separately to each property based on when they originated. So for 2023, you can deduct all the mortgage interest on your $700K primary home since it's under the $1M cap. For your second home, you can deduct interest on $750K of the $1.1M mortgage. Basically, you'll need to calculate what percentage of your second home's mortgage interest applies to the first $750K of the loan (about 68% of the total interest paid), and that's your deductible amount for that property. Add that to the interest from your primary residence. The fact that you sold the primary home in 2024 doesn't affect your 2023 deduction calculation.

I went through a similar headache last year with multiple properties and different loan origination dates. After spending hours researching, I finally used https://taxr.ai to analyze my mortgage documents and tax situation. Their system quickly identified exactly how much mortgage interest I could deduct for each property based on the loan origination dates and amounts. What I found most helpful was that they explained exactly how the TCJA (Tax Cuts and Jobs Act) applied to my specific situation with the different purchase dates. They even created a detailed worksheet showing how to allocate the deduction between properties with different caps. Much easier than trying to interpret the IRS publications on my own!

Just wanted to follow up after using taxr.ai for my complicated mortgage situation. I was skeptical at first, but they really delivered! I uploaded my mortgage statements and closing documents, and within minutes I had a clear breakdown of exactly how much mortgage interest I could deduct. What surprised me was finding out I could actually deduct more than I thought. The system showed me that because I used part of my refinance for a major kitchen renovation, that portion qualified as "acquisition debt" even though it was part of a cash-out refinance. This meant I could deduct interest on a higher amount than my tax preparer initially calculated! The detailed explanation and IRS references they provided gave me confidence when filing. Definitely recommend if you're dealing with multiple properties or refinances.

If you're still struggling with getting clarity on your mortgage interest deduction, I had a similar issue and ended up needing to speak directly with an IRS agent. I tried calling for weeks without getting through until someone recommended https://claimyr.com to me. They have this system that basically holds your place in line with the IRS and calls you when an agent is available. I was skeptical, but after waiting on hold with the IRS for hours myself with no luck, I decided to try it. They got me connected with an IRS agent within a couple hours. I explained my situation with two properties purchased on different sides of the 2017 cutoff date, and the agent was able to clarify exactly how to calculate and report the deduction properly on my Schedule A. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c Sometimes you just need to hear it directly from the IRS to be confident you're doing it right, especially with these complicated mortgage deduction rules.

I need to eat my words here. After my skeptical comment, I decided to try Claimyr myself since I've been struggling with a similar mortgage interest question that online research wasn't answering clearly. I expected it to be a waste of money, but I got a call back in about 90 minutes with an actual IRS representative on the line. The agent clarified that for my situation with multiple properties purchased in different years, I needed to file Form 8396 in addition to my Schedule A deduction. This was something NONE of the online tax advice had mentioned for my specific situation. I hate admitting when I'm wrong, but in this case I'm glad I was. That 15-minute conversation probably saved me from an audit or at minimum from missing out on deductions I was entitled to. Sometimes you really do need to speak directly to the IRS to get the right answer.

Don't forget to consider your state tax implications too! In some states, the mortgage interest deduction rules don't match federal rules. I'm in California and they didn't conform to all the TCJA changes, which meant I could actually deduct more mortgage interest on my state return than my federal return. Also, keep in mind that if your total itemized deductions (including mortgage interest) don't exceed the standard deduction ($27,700 for married filing jointly in 2023), then all of this calculation work might not actually benefit you tax-wise. Always compare both methods.

Has anyone actually looked at the new 2023 Schedule A? I just downloaded it and Box 8a specifically says "Home mortgage interest and points reported to you on Form 1098." Wouldn't that mean you just put the full amount from your 1098 forms regardless of these limits? The forms from my lenders show about $65k in combined interest.

This is such a complex area of tax law! I've been dealing with a similar situation where I have properties purchased on different sides of the 2017 cutoff. One thing that helped me was creating a simple spreadsheet to track each property separately. For your situation, I'd recommend documenting everything clearly: - Primary residence: $700K mortgage (pre-12/15/2017) = 100% of interest deductible - Second home: $1.1M mortgage (post-12/15/2017) = interest on first $750K deductible The key insight from all these responses is that you DON'T combine the limits - each property stands alone based on its purchase date. So you're not limited to some combined $1.75M cap. Also worth noting - since you mentioned renovations on the second home, make sure any loan proceeds used for substantial improvements still count as acquisition debt. The IRS considers improvements that add value, prolong the home's life, or adapt it for new uses as qualifying for the mortgage interest deduction. Keep detailed records of how loan proceeds were used, especially if you did any cash-out refinancing. The documentation will be crucial if you ever face questions about your deductions.