BillM223
Expert Alumni

Deductions & credits

Use your first method.

 

Example #1 on page 12 of Pub 936 applies to you. Note that the home equity loan was for only ten months in the tax year, so the total of the loan balances is added using the balances from ten months, which is then divided by 12.

 

Next year, since you will have all 12 months, you will exceed the $750k limit.

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