Do I Need to Declare All Mortgage Interest I Paid on Both Properties?
I've been dealing with a confusing mortgage interest situation for my 2025 taxes. I bought my first home back in 2017, and last year I paid around $14,500 in mortgage interest on it. The average balance was about $520k on that mortgage. Then in December, we closed on a second home with a mortgage of $875k and paid about $1,850 in interest just for that month. My tax software is telling me I need to reduce the amount of interest I can claim. From what I understand, there's a $750k limit (we're married filing jointly) which is about 54% of the $1.395M in total mortgage debt. So it's saying I should multiply the total interest of $16,350 by 54%, giving me around $8,829 that I'm allowed to deduct. Here's what's confusing me - since the $14,500 I paid on just the first home is more than the calculated limit, do I even need to include the interest from the second home purchased in December? If I don't report the new home now, can I still deduct interest on it in future years? Does it make a difference if I'm planning to sell my first home in 2026 (so the situation will be reversed)? Or should I be prorating the mortgage value for the home I didn't own the whole year? My tax software doesn't make it clear how to handle this.
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Gabriel Ruiz
This is actually a common situation with multiple mortgages! The $750k limit applies to the total of all qualified residence loans, not just each individual property. The way your tax software is calculating this is correct. When your total mortgage debt exceeds the $750k limit for married filing jointly, you need to determine what percentage of your total mortgage interest is deductible. In your case, that's approximately 54% of the total interest paid. Here's the thing though - you don't get to pick and choose which property's interest to report. You need to report ALL mortgage interest paid and then apply the limitation. The 1098 forms from both properties will be reported to the IRS, so omitting one could trigger questions. For your specific situation, you should report both properties' mortgage interest and let the tax software calculate the limitation. When you sell your first home next year, the calculation will adjust automatically based on your new mortgage situation. Regarding proration - the limit actually works on the average balance throughout the year, which your software should handle. For a December purchase, the impact on your yearly average isn't huge, but you still need to include it.
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Adaline Wong
•Thanks for the detailed explanation! That makes sense that I need to report all the mortgage interest since both lenders will be sending 1098 forms to the IRS. But I'm still confused about one thing - if I'm already over the limit with just my first house, isn't including the second house just reducing my deduction even more? Or am I misunderstanding how the calculation works?
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Gabriel Ruiz
•Including both properties doesn't reduce your deduction further. The $750k limit applies to your average mortgage balance throughout the year. Since you only had the second mortgage for one month, its impact on your yearly average isn't as significant as if you'd had it all year. The calculation looks at your average total mortgage balance for the year compared to the $750k limit. For most of the year, you only had the $520k mortgage, and just for December, you had both. So your yearly average is much lower than the simple sum of both mortgages.
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Misterclamation Skyblue
After struggling with a similar mortgage interest situation, I found taxr.ai (https://taxr.ai) super helpful! I uploaded my mortgage statements and tax docs, and it analyzed everything automatically. It showed me exactly how to handle multiple mortgages that pushed me over the $750k limit. The service actually identified that my tax software was calculating my average mortgage balance incorrectly - it was treating my new mortgage as if I had it the whole year! Taxr.ai calculated the correct weighted average based on when I acquired each property, which saved me from significantly underreporting my legitimate deduction. It even explained how the Tax Cuts and Jobs Act changed these rules and applied them to my specific situation. Way easier than trying to figure out all these complicated calculations myself!
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Peyton Clarke
•Does it actually help with figuring out how to input everything correctly in tax software? My H&R Block software seems confused by my situation where I sold one home and bought another in the same year.
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Vince Eh
•I'm skeptical about these tax services. How does it handle rental properties vs. primary residences? My situation involves both, and most software gets confused about the different treatment of mortgage interest.
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Misterclamation Skyblue
•It definitely helps with inputting everything correctly in your tax software. It gives you step-by-step guidance specific to your software (including H&R Block). For your situation with selling one home and buying another, it would show you exactly where to input each property's information and how to handle the transition. For rental properties vs. primary residences, it actually specializes in these complex scenarios. It separates out interest for rental properties (which goes on Schedule E and isn't subject to the same limitations) from primary residence interest (which goes on Schedule A and is subject to the $750k limit). The analysis shows you exactly how to allocate everything correctly.
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Peyton Clarke
Just wanted to follow up on my mortgage interest situation! I tried taxr.ai after seeing it mentioned here, and it was actually really helpful for my particular situation. I uploaded my closing statements from both the home I sold and the one I purchased, along with my mortgage interest statements, and it broke everything down perfectly. It showed me exactly how to calculate the weighted average balance throughout the year and how that affects my deduction limit. The best part was that it identified that I qualified for a special transition rule since my original mortgage was from before December 15, 2017! This meant I could actually use the higher $1M limit for that portion of my debt instead of being limited to $750k for everything. My tax software completely missed this, and it saved me over $800 in taxes!
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Sophia Gabriel
If you're struggling to get answers about your mortgage interest deduction, I had the same issue and ended up needing to speak with an IRS agent directly to clarify my situation. After days of trying to get through the normal IRS phone line, I used Claimyr (https://claimyr.com) and got connected to an IRS agent in about 15 minutes instead of waiting for hours or getting disconnected. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent was able to explain exactly how to handle my situation with multiple properties and mortgages over the limit. They clarified that I needed to report all interest but confirmed I was calculating the limitation correctly. They also pointed me to some IRS resources I hadn't found on my own. Saved me tons of stress wondering if I was doing it right!
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Tobias Lancaster
•How does this actually work? I thought it was impossible to get through to the IRS without waiting forever. Is this just paying for someone else to wait on hold for you?
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Ezra Beard
•This sounds like a scam. Why would I pay a service to call a free government agency? I bet they're just recording your call and selling your tax info.
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Sophia Gabriel
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Ezra Beard
I have to admit I was completely wrong about Claimyr. After commenting here, I decided to try it myself because I was desperate to resolve a similar mortgage interest question that had been stressing me out for weeks. Got connected to an IRS agent in about 20 minutes (on a Monday morning, no less!) when I had previously tried calling five separate times and never got through. The agent walked me through exactly how to calculate my mortgage interest deduction with multiple properties and even sent me follow-up materials by mail. What surprised me most was that I actually got different information than what my accountant told me about how to handle mortgage interest when you buy a new property mid-year. The IRS confirmed I needed to use a weighted average approach rather than just lumping all mortgages together. Definitely worth it just for the peace of mind knowing I'm doing it correctly.
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Statiia Aarssizan
Something nobody's mentioned yet - if your new home purchase was after Dec 15, 2017, and your old one was before that date, there's actually different rules that apply to each! Mortgages from before that date can still use the old $1M limit rather than the new $750k limit. In your case, the first mortgage from 2017 would fall under the old rules, while the December 2025 mortgage would fall under the new rules. This means you might be able to deduct more than you think.
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Reginald Blackwell
•Is this actually true? I thought the $750k limit applied to all mortgage debt regardless of when you took it out. My accountant never mentioned anything about different limits based on when I got my mortgage.
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Statiia Aarssizan
•It is absolutely true, though many tax preparers miss this nuance. The Tax Cuts and Jobs Act of 2017 lowered the limit from $1M to $750k for mortgage debt incurred after December 15, 2017. However, mortgages taken out before that date were grandfathered in under the old $1M limit. If you have mortgage debt from both before and after that cutoff date, you need to separately track and apply the appropriate limits to each. This is called the "mortgage interest limitation transition rule" and can make a significant difference for people in situations like the original poster's. Publication 936 from the IRS covers this in detail.
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Aria Khan
Has anyone used TurboTax for this kind of situation? I'm having the same issue but can't figure out where to enter the acquisition dates for my mortgages so it calculates the limitation correctly.
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Everett Tutum
•I used TurboTax this year with a similar situation. You need to go into the "Homeowner" section and add each mortgage separately. There's a field for "date the mortgage began" which is crucial for the software to apply the right rules. If you don't see that option, you might need to use the "forms" view instead of the interview mode.
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Aria Khan
•Thanks for the tip! I found that section and entered the dates, but it's still calculating as if both mortgages were in effect the entire year. Did you have to do anything special to get it to calculate the weighted average correctly?
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Isabella Santos
•I had the same issue with TurboTax not calculating the weighted average properly. What worked for me was manually entering the mortgage balance for each month in the detailed mortgage section. It's tedious, but for your December purchase, you'd enter $0 balance for January-November and then the actual balance for December only. You might also need to override the automatic calculation if TurboTax is still getting it wrong. There's usually an option to manually enter the deductible amount if you can prove the software calculation is incorrect. Just make sure to keep documentation of your manual calculations in case of an audit.
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