The old house was not sold until 2020 (unfortunately). Here is the timeline:
old house:
- mortgage last refinanced: 6/1/17
- Jan 1, 2020 principal balance: $426,874
- Dec 31, 2019 principal balance: $ 418,054 (house not sold until March 2020)
- total interest paid in 2019: $19,557
New House:
- purchased 8/29/2019
- Initial principal mortgage balance at purchase: $742,500 (on 8/29/19)
- Dec 31, 2019 principal balance: $740,252
- Total Interest pain in 2019: $9,412
If I take the average for the year, it is (($426874 + 418054)/2) + (742500 + 740252)/2 = $1,162,717. It seems that the calculations assume that these mortgages were on the same house, which is not the case. When running through the worksheet in publication 936, I end up with the ability to deduct only 64.5%. When applied to the total interest paid, it means I am only able to deduct a total of $18,685, which is less than the interest paid on only the old home.
I feel like there should be some way to run a weighted average considering the new home was owned for only 4/12 of the year, but I have been unable to find a way to do that. You mention I can treat the balance as 0 for any month the new mortgage did not exits (i.e. jan 1 - August 29) - where did you find that method of calculation for the average balance?
