Well, I see that Mike9241 is correct, but this means the IRS system for calculating limits on interest deduction is unfair.
Example: someone with a primary home with an average balance of $300k, at 3% taken out in 2016 (when the limit was $1 mil). They also have a secondary home with an average balance of $700k, at 6% taken out in Dec 2023 (so limit is $750k). The interest they pay in 2024 would be roughly $9k and $42k = $51k total.
The IRS calculation limits them to claiming 75% of the $51k = $38,250.
HOWEVER, if they did not have the first loan of $300k, their interest paid would be $42k and there would be no limitation.
So someone paying more -- $51K in interest -- can only deduct $38,250, whereas someone paying less -- $42k in interest -- can deduct the entire amount.
Just having a single loan after 2017 limits total deductions of all loans to $750k, which seems to be a gross misapplication of the rules. The discrepancy happens because of the difference in interest rates, which is very much the situation with loans in different years.
Maybe there is an alternate way to calculate the limit, but I haven’t found it.
