Mortage interest calculation

[Graphite]

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 ? 

[NCperson]

@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?  

[AmyC]

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.