Hello,

I purchased a house in 2019, with a mortgage amount that is over the 750k limit. It's clear to me how to calculate the average balance for 2020, where the loan exists for 12 months out of the year. I'm a little less sure about what to do for 2019.

Publication 936 page 13 says "[y]ou can treat the balance as zero for any month the mortgage wasn't secured by your qualified home" when calculating the average mortgage balance. It sounds like I should be treating the months in 2019 before the loan was originated as having 0 balance.

For example (to use round numbers) if the loan was $2M, and taken out in July, the average balance would be around $1M ( [$0 * 6 months + $2M * 6 months] / 12 months), not accounting for a small part of the principal paid off. I would then be able to deduct 75% of the interest paid in 2019 (750k limit / 1M average balance).

Would this be the correct way to calculate this? Thank you!