Taxpayer refinanced a loan originally secured in 2016.  In 2020, the original loan balance at pay off time was $900,000.  The new mortgage is $1,200,000.  The cash out was used for remodeling. I don't know if they ever had a HELOC on the property.

Is their mortgage interest deduction limited to the prior balance $900,000, or $1,000,000 (the new limit for loans originating post 1987 pre 2017) or $1,100,000

I attempted filling out pub 936 II table 1 worksheet but was stumped on the average loan balance for the loan that was paid off.  At year end the balance was zero so not sure if I use the $900 K or half of that.  Then I got dizzy so I thought I'd reach out... love these last minute people!

Thank you