TurboTax incorrectly dropping mortgage interest deduction from second house

This sounds like a TurboTax software issue, not actually a tax rule problem. You absolutely can deduct mortgage interest from two different primary residences in the same tax year, as long as each was your primary residence during the period you owned it. The mortgage interest deduction allows you to deduct interest on up to $750,000 of qualified residence loans (for mortgages taken out after Dec 15, 2017) or up to $1 million (for mortgages taken out before Dec 15, 2017). Since your first mortgage was from 2017 and second from 2021, they fall under different caps, but both should still be deductible. Try this: After entering the information for both homes, go back through the software step by step. Check if you accidentally indicated something that would disqualify the deduction. Sometimes TurboTax asks tricky questions about whether the home was your primary residence, if you refinanced, or about loan points that might be causing the issue.

I ran into almost the exact same issue last year using TurboTax. After hours of frustration, I finally discovered that taxr.ai (https://taxr.ai) could instantly analyze my mortgage documents and tax forms. It identified that TurboTax was incorrectly categorizing my second mortgage as a home equity loan rather than a primary mortgage. The tool actually showed me exactly which screen in TurboTax was causing the problem - there's a question about loan purpose that was tripping up the calculation. Once I corrected that single entry based on their recommendation, both mortgage interest deductions appeared correctly. Saved me literally thousands in deductions that TurboTax was about to miss!

Just wanted to update everyone - I tried taxr.ai after seeing it mentioned here, and it immediately identified my mortgage interest deduction problem! Turns out there was a specific screen in TurboTax where I needed to select "primary mortgage" instead of "home acquisition loan" for my second property. The difference was over $4,200 in additional deductions! What's crazy is I spent hours on the phone with TurboTax support and they couldn't figure it out. The taxr.ai analysis took like 5 minutes and pinpointed the exact issue. Just wanted to share in case anyone else is dealing with this frustrating mortgage interest glitch.

If you're still stuck after trying all the TurboTax troubleshooting, you might need to speak directly with the IRS. I wasted days last year with a similar mortgage deduction issue, then found Claimyr (https://claimyr.com) which got me connected to an actual IRS agent in about 15 minutes instead of the usual 2+ hour hold time. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with explained exactly how mortgage interest deductions work when you own two properties in the same year. She confirmed TurboTax was calculating it incorrectly and explained what to override. Was honestly shocked that I got through so quickly and got such helpful information directly from the source.

I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I was still frustrated with my own tax situation (similar mortgage interest problem), so I decided to try it. Got connected to an IRS representative in about 20 minutes. The agent confirmed that mortgage interest from both properties should be deductible in the same year as long as both were used as primary residences during the periods you owned them. She explained that the total combined mortgage amounts matter for the caps, but having two properties isn't itself an issue. After that call, I went back to TurboTax and discovered I had accidentally marked my second property as an investment property in one section while correctly marking it as a primary residence in another - that inconsistency was causing the software to reject the deduction.

Have you tried using a different tax software? I switched from TurboTax to FreeTaxUSA this year because of too many glitches like this. It handles multiple properties much better and is way cheaper. I had a similar situation with two homes and it calculated everything correctly the first time. The mortgage interest deduction can be tricky with multiple properties, but the law is clear that you can deduct interest on both as long as they were each your primary residence during the time you owned them.

Check your AGI too! I had this exact problem and discovered TurboTax was incorrectly applying a phase-out to my mortgage interest deduction because my income was over a certain threshold. The software was calculating it wrong though. If your Adjusted Gross Income is over $250,000 (married) or $125,000 (single), TurboTax sometimes incorrectly applies limitations. That might explain why it's disappearing when you add the second mortgage - the combined amount might be triggering some faulty logic in their calculations.

I'm a tax professional and I see this TurboTax issue frequently with clients who own multiple properties in the same year. The software often has trouble handling the transition from one primary residence to another, especially when there's overlap with mortgage interest reporting. Here's what I recommend: Go to the "Forms" view in TurboTax and look at your Schedule A directly. Check if both mortgage interest amounts are showing up there. If they are, but your total deduction is wrong, there might be an issue with how TurboTax is calculating the limitation based on your loan amounts or dates. Also, make sure you're not accidentally double-entering information. Sometimes people enter mortgage interest in both the "Home Mortgage Interest" section AND the "Investment Interest" section, which can cause the software to remove deductions to avoid double-counting. If all else fails, you can manually override the mortgage interest deduction on Schedule A. Just make sure you have proper documentation (your 1098 forms) to support the amounts you're claiming.