Thank you so much for sharing your expertise! In my case, these are two separate loans for two separate homes taken out 6 years apart with two separate limits. The first loan is between 750,000 and 1,000,000. This year, 2/3 of my total interest is under the 1,000,000 limit and 1/3 of my total interest under the 750,000 limit. The way IRS calculates it, less of my first mortgage under the 1,000,000 limit becomes eligible for deduction when the second mortgage is added than if it weren't added. That's because the proportion of what is under the 1,000,000 decreases when adding the second mortgage. I don't think this was intended by IRS in this very particular situation.
It sounds like it is possible to choose the second mortgage not as not-secured and not deduct, but I would need to declare the mortgage secured in the future by obtaining permission from the IRS. Do you know how I can do that in the future? And is there a risk of not being allowed to obtain this permission? Thank you.
