How do I calculate mortgage interest deduction in this situation: Bought house in 5/2018, original mortgage of $860k; recast a month later to reduce principal to $750k.

[jrl8]

Bought a condo in 2010 for approx $460k, sold it 6/15/2018, paid $5,566 in mortgage interest in 2018 on it.

Bought a house 5/2/2018 with an original mortgage principal of $861k. Recast it 6/20/2018 with the proceeds of the condo sale to reduce the principle to $750k, i.e., the max for full mortgage interest deductions. Ended 2018 with a principal of $741,168. Paid $18,674 in interest on that loan in 2018.

Moved from one to the other on 6/11/2018, i.e., condo was principal residence for 160 days (out of the 165 I owned it) and house was principal residence for 205 days (out of the 244 I owned it).

How do I calculate my mortgage interest deduction? 

[erdo]

I'm in a similar situation and after some online research, I used Table 1 in IRS publication 936 for every month in the year instead of doing it for the whole year. You will need to know your monthly principal balance for each loan, and follow the steps.  At the end, you will end up with the allowed deductible mortgage interest for each month, which you can add up to get the yearly amount.

If you paid points on your new loan, you will also need to prorate that amount using the decimal calculated in step 14.  Since you will have multiple decimals throughout the year, you can calculate a weighted number by dividing the total of step 15 by the total of step 13.

I'm not a tax expert so please do not take this as official tax advice.  Just telling you what I did.