We stayed in out first home from Jan-June 2024 and moved into a second primary home in June and rented the first home from July-Dec'24. Here is how i calculated mortgage interest, please let me know if this is correct.
First home ($ numbers for illustration purposes only)
Total Interest paid on 1098: $1000
% rental days: 50%
Mortgage interest expensed on Sch E for rental : $500
Mortgage Balance beginning of year: 220k
Mortgage Balance end of year: 180k
Average Balance on first home: 200k
Second Home
Mortgage interest paid total in 2024=10,000
Mortgage balance beginning of year: 800k
Mortgage balance end of year: 700k
Avg mortgage balance on second home: 750k
Total mortgage balance average=200k+750k=950k
Max mortgage for houses after Dec 2017= 750k
Ratio=750k/950k=0.78
Mortgage interest I can deduct= 0.78 *(personal use interest from first home*mortgage interest from second home)=0.78*($500+$10,000)=$8289.4 --->this is the deductible mortgage interest on Sch A
