Was trying to calculate mortgage interest deduction I can take based on MFJ and MFS limits of 750k and 375k.
Approx numbers
Paid mortgage interest of $50,000 on $1.5M of avg mortgage balance
For MFJ , based on IRS publication the calculation is ( $750k/$1.5M ) x $50k= 0.5 x $50k = $25k
For MFS, I split interest paid by half i.e. $25k each. Kept loan amount the same of $1.5M.
Hence, based on IRS publication the calculation is ( $375k/$1.5M ) x $25k= 0.5 x $25k =$6.25k
If both spouses itemize and claim the MFS based mortgage interest deduction, it comes to $12.5k which is half the MFJ deduction.
Common sense tells me this is not correct but the publication and internet says this is how I should do it. It makes sense only if I divide the mortgage balance in half as well for MFS but guidance says use loan balance.
Is calculation flawed?
