I had a mortgage of about 686K for my principle resident. I bought my new resident with a mortgage of 1.8M in Jun, then I sell my previous house in Aug. Bring down mortgage to 1.4M in Oct. How much mortgage interest I should claim with itemize deduction?

[RichardK · Accepted solution]

You can deduct the interest on the old residence up to the time you purchased the new residence.

In addition to the interest on the old residence:

If you have the mortgage interest by month, for the new residence, you would deduct 61.11% (1.1 million divided by 1.8 million) for any interest paid at closing, July and July. Then for September, October, November, and December you would deduct 78.57% (1.1million divided by1.4 million) of the mortgage interest.

If you do not have the monthly interest amounts you could use a weighted average for the year of 71.1% for the mortgage interest for the new residence.

[dan15]

I will do monthly interest. What if I have a home business, assuming I can take 10% from home expense?