To make sure that I understand correctly, the below is the correct way to calculate the deduction?
Example:
Total mortgage: 1,200,000
Total interest: 40000
Portion of rental: 25%
Personal-use mortgage = 1,200,000 * 75% = 900,000 -> 750,000 (due to the cap)
Rental-use mortgage = 1,200,000 * 25% = 300,000
Itemized deduction = 40000 * 750,000 / 1,200,000 = 25000
Rental expense deduction = 40000 * 300,000 / 1,200,000 = 10000
