MindyB
Expert Alumni

Deductions & credits

You should report the Box 2 - Outstanding mortgage principal as zero for the first two 1098s in your example. This should correct the error and allow the mortgage to be deductible- assuming you have no mortgage on your first home.  The $750,000 limitation does include both primary and secondary homes together, not individually. 

 

Here is some more information: Deducting Mortgage Interest FAQs