I think your option 1 is the same as the 1st example that the IRS displays beginning on the left column bottom of page 13. They say to take the interest for EACH mortgage and divide by the annual interest rate to get the average mortgage balance. That is effectively the same thing as using zeros in the months the mortgage wasn't outstanding, which is the way you attacked it. the IRS approach and your approach are a little different, but I would be surprised if it materially different. Does the IRS get you to under $750,000 this year, I bet it does!
this is at the bottom of page 13 and it continues to the middle column with an example.
Interest paid divided by interest rate
method. You can use this method if at all times
in 2019 the mortgage was secured by your
qualified home and the interest was paid at
least monthly.
let me know what happens!
