@Opus 17
<<if you refinanced a $50,000 purchase mortgage into $150,000 and used the $100,000 for your investment, you could deduct either 1/3 the interest on schedule A as a home mortgage, or 2/3 the interest as an investment expense, but not both.>>
and I think the way it technically works is that as the $150,000 mortgage pays down, the acquisition debt remains at $50,000, so while the interest allocated to the personal home would stay constant for quite awhile, the interest on the investment property would go all the way to zero before the interest on the acquisition debt went down.
So it's really easy to calculate. Adding on to your example... and saying the interest rate is 4%
then $2,000 of interest each year ($50,000 * 4%) would be part of Schedule A each year and the rest of the interest would be part of the investment property expense. The interest related to acquisition debt wouldn't go down until the mortgage balance was less than $50,000.
