You need to pick one as your main home and one as your second home. Since your new purchase was your main home at the end of the year, it makes sense to designate this home as your main home, especially if you can and are planning to deduct all of the points paid on this mortgage this year.
Your deduction will be limited to the interest on $750,000 if the sum of the average balances of both loans is greater than $750,000.
