You would use the Outstanding Mortgage Balance method to solve this. Basically, if you owed $500,000 and sold your house in March, then bought a new house in April for $500,000 you would average the balance out over the year.
So you would use $500k for Jan, Feb and Mar then $0 for the rest of the year for an monthly average balance of $125,000.
Then for the new house you would enter $375,000. ($500k for 9 months, $0 for 3 months)/12
So you would enter $125k for the balance for the first house and $375k for the balance for the second house.
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