If you use the Statements Provided by Your Lender averaging method, then the answer to your first question is yes. Enter $0 for loan B for October through December. For loan C, enter the ending balances for October through December and $0 for January through September. Calculate the respective averages for loans B and C by summing the monthly balances and dividing by 12. Add the average balances for loans A, B, and C together. If you follow these instructions, the total average balance for all of your mortgages will be $774,455.46 (based on the numbers you provided) which will allow to deduct 96.8% (you need to round off to three decimal places) of all the interest paid on loans A, B, and C. Note: You can also use the Interest Paid/Interest Rate method to calculate the average for loans B and C.
I am assuming that the construction loan was a stand-alone loan and was secured by a first mortgage, deed of trust or other security instrument that forfeits your ownership rights during construction if the loan was not paid. I am also assuming the loan C was an actual refinance used to payoff loan B.
In Turbo Tax, be sure to specify that loan B was refinanced in 2024 and that loan C is a refinance of a previous loan with the same Origination Date as loan B. This should the date in Box 3 of the 1098 form.
