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Updated about 9 hours ago on . Most recent reply

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Naji S.
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Unsure about calculation for mortgage interest deduction on converted primary

Naji S.
Posted

Wondering if someone can point me to a reliable resource because the hours of research i've done online did not give me any clear, obvious examples of how to do this correctly.

I owned my first primary residence for some years. The loan on this house is $650,000.

I closed on a new primary residence end of June. The loan on this house is $1,200,000.

I moved in to my new primary residence by the end of the month.

Starting July, my original primary residence was available as a rental and was being shown to prospective tenants.

My new tenants signed a lease that began a couple weeks after showing, in July.

To calculate my primary residence mortgage interest deductions, i'm using the following formula:

650,000 / 2 = $325000 loan from January to June

1,200,000 / 2 = $600,000 loan from July to December

$750,000 limit / (600,000+325000 total loan value)  = 0.81 multiplier

(0.81 * $X first house interest) + (0.81 * $Y second house) = total interest payed i can deduct from my primary residence

does this look correct? any help would be appreciated. Thank you!

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