sorry - I just found this link for others that may read this thread..... it clearly states that the tracing rules do NOT work for residential real estate interest as a result of the 2018 tax law changes.
https://roundtablewealth.com/resources/mortgage-interest-tracing-rules/
The Interest Tracing Rules
The Regulations under Internal Revenue Code (“IRC”) Section 1.163-8T define the method for allocating interest in order to apply the appropriate deduction limitations for passive activity interest, investment interest and personal interest and are commonly referred to as the “interest tracing rules.” These rules do not apply to the deduction for qualified residence interest. The qualified residence interest rules as outlined above define the security interest (the qualified residence) and use of proceeds rules in order to determine the appropriate deduction
(what the link states as 'as outlined above" are the Part I rules I quoted earlier in this thread.)
