House 1 will be prorated between principal residence and rental residence.
- Residential Interest (Jan–Oct):
- $30,000 times (10/12) =$25,000 (Subject to the $750k$ limit)
- $1,000,000 times 10 months / 12 = $833,333 average balance
- Rental Interest (Nov–Dec): $30,000 times (2/12) = $5,00 (Deductible on Schedule E; not subject to the limit)
House 2 -"The second house was acquired in September" -will use the 4 months you owned it as a primary or secondary residence for Sch A. Unless you meant "since I have the second mortgage for just 2 months" and only had the mortgage for two months total during 2025. Use the correct number of months that you owned the house- regardless of occupancy.
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