Mahmood100,
IMHO, you are correct. It is closely akin to a refinance but at least
https://ttlc.intuit.com/community/tax-credits-deductions/discussion/i-refinanced-and-have-two-1098-f...
says that there has been a problem getting that to work. I've asked the powers-that-be to evaluate it and let me know if there has been progress.
As a workaround, though, you can do a little algebra:
I1/M1 + I2/M2 = (I1 + I2x(M1/M2))/M1
and treat it as a single original mortgage with interest supplemented by a scaled version of the second mortgage interest. (Or interchange and use the newer mortgage.) This works if both hit the $750K limit.
