that is correct; the 'acquisition' debt is 'stuck' at $300,000 until the mortgage amortizes down to $300,000
Suggest taking the 12 point average of the mortgage for the year. $300,000 / mortgage average is the percent of interest that is tax deductible on schedule A; the rest is deductible on Schedule C/E.
Note that if you later sell the rental property and do not but another rental property, and the mortgage balance is above $300,000, the interest related to the portion above $300,000 is NOT tax deductible
