@VictoriaD75 while I agree the limit is $750,000 it's based on the AVERAGE balance, not the ending balance.
So let's say I have a $200,000 mortgage and sell the home on June 30 (let's not worry about amortization for simplicity). Then I purchase a new home on July 1 where the mortgage balance is $800,000 for the last 6 months of the year.
Over the course of the year, I had $500,000 of AVERAGE mortgage debt outstanding. All the interest on both mortgages is tax deductible because the AVERAGE for the year is below $750,000.
Yes, in 2020, I have a problem because the AVERAGE for the year is $800,000 (assume no amortization) which exceeds the $750,000 limit.
Please see publication 936 and the table on page 12 as well as the explanation of how to approach line 7 which is noted on page 13.
