I have an average mortgage balance of $390,000 (originated in 2011) on my previous primary residence (House A) where I was living till end of April 2018. I bought another house (House B) as primary residence in 2018 and moved into it in May. The average mortgage balance on House B is $690,000. I rented House A starting May 2018.
I know that I can split my mortgage interest for house A based on duration rented and use it to offset rental income. The other part I can claim as mortgage interest deduction. New tax laws for 2018 limit the mortgage interest deduction for mortgages originating after Dec 15, 2017. The limit is $750,000 for combined balance of all mortgages originating before and after Dec 15, 2017. My mortgage balance is certainly higher than the limit. However, in making the calculations using publication 936, I need to calculate total of my mortgages. I wonder whether I should use the full average mortgage balance for house A in this calculation or prorate it based on duration it was occupied as primary residence and duration rented.
Please help on the matter.
