To figure the total average mortgage balance, use 1/2 of the average balance for the home purchased with your friend prior to 12/2017. You just have to figure out how to get Turbo Tax to calculate 1/2 of the average balance. Your mortgage deduction should not be limited.
For the second home, you need to enter the 1098's for both banks in the order received because you can't just ignore it and you want to claim all interest paid. For the first 1098, be sure to select 'Not the latest 1098' box that shows up after the 1098 info and selecting Done. For the second 1098, select 'This the latest 1098'.
