Need help

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I posted the question years ago, and afraid that I got the wrong answer.

Taxpayers have a house.(A) In 2003 they refinanced this house and took out $100,000 to acquire another house. (B)
House A – original mortgage 200,000 and 300,000 after refinancing.
House B - $100,000 used for down payment. Mortgage balance $400,000.
In November 2003, taxpayers convert house A into Rental and move in house B (which becomes their primary residence.
Tracing rules require allocating the interest to the residence.
I was told before to allocate 34 % of the mortgage interest from property A to property B (Schedule A) that I did.
Does anyone see something wrong with that?

[Bees Knees]

Yes I see something wrong with that. You can’t deduct mortgage interest unless the loan is secured by the taxpayer’s primary or second residence. If the mortgage is secured by rental property, that’s not the taxpayer’s primary or second residence. And if one third of the interest is traced to something other than the rental property, its not deductible as rental interest.

The interest is thus non-deductible personal interest.

Sorry you got the wrong advice years ago.

[Davc]

Yes. Once A was no longer their principle residence, the equity interest is not deductible anywhere unless it can be traced to business or investment use.

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ouch

I remember that in 2004 after researching I called to IRS to verify the information and was told that I need to apply Tracing Rules. I specifically was told by the agent that I need to apply 34% of the loan to the Principal Residence. Can't find any notes whom I talked to. And you know how fast they tell their number. I was just happy that I was doing it right.
Do I have to amend all those years or just pray and hope.