I am going to assume that the original main home that you owned and the second home you wife owns were purchased after 12/15/2017 and that the balances on all three mortgages are good approximations of the averages. Turbo Tax will divide the $750K limit by the sum of all three average balances: $750K/$1,539,651 = 48.7%. Multiply this % by the total interest paid: $29,798 * .487 = $14,512 of deductible interest.
However, you will get a better deal if you declare the original main home that was sold as unsecured. This is allowed in Pub 936 and there is a box in Turbo Tax to uncheck to declare this option. Then divide the $750K limit by the sum of the average balances for the second home and the new main home: $750K / ($222,358 + $640,00 = $862,358) = 87.0%. Multiply this % by the total interest paid on these two homes: $20,652 * .870 = $17,967. This is called the simplified method used in Table 1 in Pub 936. Turbo Tax does it this way but may figure the averages a little different and not round off the percentage to three decimal places.
You can use the exact method instead of the simplified method but it yields less than $200 more in the deduction and you have to calculate it yourself and enter it in Turbo Tax. If you are interested in how to figure the deduction using this method, let me know.
