@Graphite - use a 12 point average.
for the first mortgage, use the actual balance for each of the first 10 months of the year (look at the servicer statement) and then use zero for months 11 and 12. what is the 12 point average? this mortgage was no longer a Qualified Mortgage, since you began renting the property on November 1.
for the 2nd home mortgage, use zero for the first 8 months and the acutal balance for each of the remaining 4 months of the year (look at the servicer statement). what is the 12 point average?
Add the results of the two calculations together. That is the average mortgage balance that should go on Line 2 of the worksheet on page 14. Using this method appropriately weights the mortgages for the months they were outstanding.
Now use the rest of the worksheet to determine the interest deduction. When you get to Line 13, exclude the interest from November and December on the first home mortgage since you are going to deduct that on Schedule E. that is consistent with using zero for the 12 point average mortgage balance for November and December.
This method is discussed on page 15 "statement provided by your lender".
you do have two months where both mortgages are qualified, so the resulting balance may be higher than you first expected.
the interest on the first home for november and december can be deducted on schedule E because you began renting that property on November 1 (and another reason that I have zero for November and December above on the first home mortgage)
Does that help?
