I suggest designating home B as your primary home for 2023. If you paid points when you took out the mortgage and they are listed on the 1098, you will have the option to deduct them this year instead of spreading them out over the life of the loan. I assume you don't have a 1098 from the 'sold to' lender for 2023. In this case Select 'This is the latest 1098'. Next enter your 1098 for the HELOC. Select the HELOC is secured by home B. The average balance for the HELOC should be taken over the active months of the home B mortgage regardless of the HELOC origination date (same for 2024).
Designate home A as your second home for 2023 which you converted to a rental on Dec 16, 2023. Select 'other' to the Primary/Secondary/Other question. You can claim rental expenses for 1/2 month on interest and taxes, and advertising costs.
However, your mortgage deduction is going to be severely limited for 2023 because of the short time home A is a rental and buying a new home so late in the year. Claiming rental expense for 1/2 month will help a little but it will be much better starting in 2024 when home A is a rental all year.
