Mortgage Interest Rate Deduction

[RWSSJS]

My wife and I have a mortgage on our primary residence. We obtained the loan in September 2005. The mortgage balance is $572,000. We purchased a second home (not investment property) in June 2018. The mortgage balance is $426,000.

Do I need to apply the the sum of the two mortgage balances (over $750,000) and apply the rule for the loan secured after 12/15/2017 on the whole amount which limits our deduction or do I apply the rules separately? By this I mean, do I get the full mortgage interest deduction for each mortgage as one mortgage was done before 12/15/2017 and it is less than $1,000,000 and the other was after 12/15/2017 but us less than $750,000?

[DavidD66 · Accepted solution]

Your mortgage on your primary residence is grandfathered in for the $1,000,000 limitation rule, but that's a moot point since it's only $572,000.  With the addition of the second home mortgage, you have to use a $750,000 combined limit.