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No. Generally, to fully deduct mortgage interest, the principal would have to be below $750,000 at all times during the year.
The average of first and last balance method can be used if all of the following apply:
- You didn't borrow any new amounts on the mortgage during the year. (This doesn't include borrowing the original mortgage amount.)
- You didn't prepay more than 1 month's principal during the year. (This includes prepayment by refinancing your home or by applying proceeds from its sale.)
- You had to make level payments at fixed equal intervals on at least a semi-annual basis. You treat your payments as level even if they were adjusted from time to time because of changes in the interest rate.
I have attached IRS Figure A for additional information in determining when your mortgage interest is fully deductible.
