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Mortage interest calculation

Graphite — Tue, 31 Mar 2026 04:58:19 GMT

I have two mortgages both acquired after 2020 (2022 and 2025). So they are subjected to the 750k limit.
The first house was my primary residence from January to October of 2025, while the second house was my primary residence in November and December. (The second house was acquired in September. The first house was rented out from November onwards.) For the sake of simplicity - Lets assume my average mortgage balance for both houses is 1 million each in 2025. I paid 30k in interest for the first house, and 10k interest for the second house.
How do I calculate the average balance in p936 worksheet?
If I just sum up the two mortgages, the ratio of 750k/2M is lot smaller (0.375) than if I had just a single mortgage (0.75) - which reduces my interest rate deductions a lot. I thought since I have the second mortgage for just 2 months it should be prorated accordingly? Something like (1M * 10 + 1M*2)/12 = 1M ?

Re: Mortage interest calculation

NCperson — Tue, 31 Mar 2026 08:54:19 GMT

@Graphite - use a 12 point average.

for the first mortgage, use the actual balance for each of the first 10 months of the year (look at the servicer statement) and then use zero for months 11 and 12. what is the 12 point average? this mortgage was no longer a Qualified Mortgage, since you began renting the property on November 1.

for the 2nd home mortgage, use zero for the first 8 months and the acutal balance for each of the remaining 4 months of the year (look at the servicer statement). what is the 12 point average?

Add the results of the two calculations together. That is the average mortgage balance that should go on Line 2 of the worksheet on page 14. Using this method appropriately weights the mortgages for the months they were outstanding.

Now use the rest of the worksheet to determine the interest deduction. When you get to Line 13, exclude the interest from November and December on the first home mortgage since you are going to deduct that on Schedule E. that is consistent with using zero for the 12 point average mortgage balance for November and December.

This method is discussed on page 15 "statement provided by your lender".

you do have two months where both mortgages are qualified, so the resulting balance may be higher than you first expected.

the interest on the first home for november and december can be deducted on schedule E because you began renting that property on November 1 (and another reason that I have zero for November and December above on the first home mortgage)

Does that help?

Re: Mortage interest calculation

AmyC — Tue, 31 Mar 2026 15:55:40 GMT

House 1 will be prorated between principal residence and rental residence.

Residential Interest (Jan–Oct):
- $30,000 times (10/12) =$25,000 (Subject to the $750k$ limit)
- $1,000,000 times 10 months / 12 = $833,333 average balance
Rental Interest (Nov–Dec): $30,000 times (2/12) = $5,00 (Deductible on Schedule E; not subject to the limit)

House 2 -"The second house was acquired in September" -will use the 4 months you owned it as a primary or secondary residence for Sch A. Unless you meant "since I have the second mortgage for just 2 months" and only had the mortgage for two months total during 2025. Use the correct number of months that you owned the house- regardless of occupancy.

Re: Mortage interest calculation

Graphite — Thu, 02 Apr 2026 16:12:32 GMT

Thank you for your response! I closed the house in September, so the earliest statement I have, is from October.

So if I have something like this,

	Mortage 1	Interest Paid from Mortgage 1	Mortgage 2	Interest Paid from Mortgage2	Effective Mortgage
January	958,616.81	3,200.00	0	0	958616.81
February	957,229.02	3,195.39	0	0	957229.02
March	955,836.59	3,190.76	0	0	955836.59
April	954,439.53	3,186.12	0	0	954439.53
May	953,037.81	3,181.47	0	0	953037.81
June	951,631.41	3,176.79	0	0	951631.41
July	950,220.33	3,172.10	0	0	950220.33
August	948,804.54	3,167.40	0	0	948804.54
September	947,384.04	3,162.68	0	0	947384.04
October	945,958.80	3,157.95	959,044.31	4,800.00	1,905,003.11
November	944,528.81	3,153.20	958,083.85	4,795.22	958,083.85
December	943,094.05	3,148.43	957,118.59	4,790.42	957,118.59

So are my calculations below right?
In page 14 in Publication 936 pdf:
At line 7 , that would be 12 point average of 1,033,117.13
Line 13 would be 46,176.3
Line 14 would be: 0.726
Line 15: 33,523

Re: Mortage interest calculation

Graphite — Thu, 02 Apr 2026 16:23:58 GMT

Thank you all for your responses!

I closed my house in September so the earliest statement from the second mortgage is October.

	Mortage 1	Interest Paid from Mortgage 1	Mortgage 2	Interest Paid from Mortgage2	Effective Mortgage
January	958,616.81	3,200.00	0	0	958616.81
February	957,229.02	3,195.39	0	0	957229.02
March	955,836.59	3,190.76	0	0	955836.59
April	954,439.53	3,186.12	0	0	954439.53
May	953,037.81	3,181.47	0	0	953037.81
June	951,631.41	3,176.79	0	0	951631.41
July	950,220.33	3,172.10	0	0	950220.33
August	948,804.54	3,167.40	0	0	948804.54
September	947,384.04	3,162.68	0	0	947384.04
October	945,958.80	3,157.95	959,044.31	4,800.00	1,905,003.11
November	944,528.81	3,153.20	958,083.85	4,795.22	958,083.85
December	943,094.05	3,148.43	957,118.59	4,790.42	957,118.59

Are my calculations right here for the publication 936?
Line 7: 1033117.13
Line 13: 46176.3
Line 14: 0.726
Line 15: 33522

Re: Mortage interest calculation

Graphite — Thu, 02 Apr 2026 16:26:35 GMT

Thank you all for your responses!
I closed my house in September so the earliest statement from the second mortgage is October.

	Mortage 1	Interest Paid from Mortgage 1	Mortgage 2	Interest Paid from Mortgage2	Effective Mortgage
January	958,616.81	3,200.00	0	0	958616.81
February	957,229.02	3,195.39	0	0	957229.02
March	955,836.59	3,190.76	0	0	955836.59
April	954,439.53	3,186.12	0	0	954439.53
May	953,037.81	3,181.47	0	0	953037.81
June	951,631.41	3,176.79	0	0	951631.41
July	950,220.33	3,172.10	0	0	950220.33
August	948,804.54	3,167.40	0	0	948804.54
September	947,384.04	3,162.68	0	0	947384.04
October	945,958.80	3,157.95	959,044.31	4,800.00	1,905,003.11
November	944,528.81	3,153.20	958,083.85	4,795.22	958,083.85
December	943,094.05	3,148.43	957,118.59	4,790.42	957,118.59

Are my calculations right here for the publication 936?
Line 7: 1033117.13
Line 13: 46176.3
Line 14: 0.726
Line 15: 33522

Re: Mortage interest calculation

Graphite — Thu, 02 Apr 2026 18:57:01 GMT

Thank you all for your responses!
I closed my house in September so the earliest statement from the second mortgage is October.

Month	Mortgage 1	Interest 1	Mortage 2	Interest	Effective Mortgage
January	958,616.81	3,200.00	0	0	958616.81
February	957,229.02	3,195.39	0	0	957229.02
March	955,836.59	3,190.76	0	0	955836.59
April	954,439.53	3,186.12	0	0	954439.53
May	953,037.81	3,181.47	0	0	953037.81
June	951,631.41	3,176.79	0	0	951631.41
July	950,220.33	3,172.10	0	0	950220.33
August	948,804.54	3,167.40	0	0	948804.54
September	947,384.04	3,162.68	0	0	947384.04
October	945,958.80	3,157.95	959,044.31	4,800.00	1,905,003.11
November	944,528.81	3,153.20	958,083.85	4,795.22	958,083.85
December	943,094.05	3,148.43	957,118.59	4,790.42	957,118.59

Are my calculations right here for the publication 936?
 Line 7: 1033117.13
 Line 13: 46176.3
 Line 14: 0.726
 Line 15: 33522

Re: Mortage interest calculation

NCperson — Fri, 03 Apr 2026 01:04:28 GMT

@Graphite some suggestions

1) you do have a number for September for both the balance and the interest. Look at your closing / settlement statement. That interest is deductible. And the opening balance is the end of September balance. Just because it wasn't reported by the mortgage service doesn't mean it's not deductible.

2) Since you rented out the 1st home effective November 1, the interest is deductible on Schedule E and not Schedule A. You are better off that way. The November and December balance and interest expense should be ZERO. And then on Sch E, you can deduct the $3153 and the $3148 (separately, same thing for the property tax - 2 months can go on Sch E).

repost again and let's see what it looks like. you should be better off because of you can deducft 100% of the $3153 annd the $3148