I have two mortgages in 2023 with over $750K in outstanding balance. The larger mortgage is $1.2M outstanding at 5%. The smaller mortgage is $800K outstanding at 2.75%.
May I only deduct the larger mortgage (which as much more interest paid) up to $750K? In other words, I paid twice as much mortgage interest on the bigger loan, and I want to maximize the amount of the deduction.
The short answer is no, not exactly. The remaining acquisition debt for the two loans are added together and then limited to $750K to figure the percentage of interest that can be deducted. 750K /(1.2M + 800K) = 37.5%. So you can deduct 37.% of the total interest paid.
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