@tbain98 You can use the different periods as you describe and you should end up with an annualized ratio as the example I shared before.
To support an annualized calculation here is another example. Mathematically, for a loan opened 1 March, the interest paid = [(annual interest rate)/12 X annual loan amount] x 10 which also equals annual interest rate x [monthly loan amount x 10].
Interest rate 3%
Loan amount 800K
10 months
Interest paid = 20,000 No matter which formula above is used.
20K = [(.0025) x 800K] x 10
20K = .03 x (66,667 x 10)
What mortgage balance to use in Table 1?
1. Mortgage Balance 800,000K deduction 18,750
2. Mortgage Balance 666,667 deduction is 20,000
So from one perspective the mortgage balance that the interest has been paid on is over $800K every month by using 1/12 of interest every month for 10 months.
But from another perspective the aggregate mortgage balance that interest has been paid on doesn't exceed $800,000 until about month 11 with the full interest rate being used every month. So 10 months would be deductible.
Same loan, same interest rate, same 10 months, same interest paid every month, same total interest paid for the year.
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