Owner occupied triplex tax question.

[John Mezzapesa]

My wife and I own a triplex in which we reside in one of the units. The portion of the property used for personal use is 52.8% and the portion for rental usage is 47.2%. The full mortgage on the entire property is over the allowable principal limit of $750,000 set by the IRS.

From what I understand there is no limit to the amount of mortgage interest we can claim as an expense for the rental. However, on the personal portion of the property we would be limited in claiming a the percentage of mortgage interest equal to the ratio of the IRS limit divided by the average loan amount ($750,000/LOAN AMOUNT).

Since we are splitting the rental amount off of the full mortgage interest would we be correct in assuming that we can claim all mortgage interest associated with the full 58.2% of the loan amount?

In other words, does the $750,000 mortgage limit still apply if the mortgage interest is split between the rental and personal portions of the property, effectively lowering the principal amount of the loan amount applied to the personal portion under the $750,000 limit?