How
much of my home mortgage interest is deductible?
Generally, interest
on "acquisition debt" is deductible as long as the
debt doesn't exceed for $1 million ($500,000 if you
are married filing separately.) Acquisition debt is debt that
is used to buy, build, or improve your home. Acquisition debt
is a type of qualified home mortgage interest.
Interest on a mortgage
secured by a second home is also deductible, but the total
debt from first and second homes combined should not exceed
the $ 1 million / $500,000 MFS limits.
These limits were
considered sky high, and we almost never needed to worry about
them. But now the real estate prices has risen so much, million-dollar
mortgages are not rare anymore. So you do want to watch out
for these limits.
Another type of
qualified home mortgage interest is home-equity debt.
For more information,
refer to IRS Publication 936, Home
Mortgage Interest Deduction, and IRS Tax Topic 504,
Home
Mortgage Points.
Related topic:
Are
Points Paid for Home Mortgage Refinance Deductible?
Reference
IRS
Tax Topic 505, Interest Expense.
This
material is provided for general and educational purposes
only, and is not intended to provide legal, tax or investment
advice. Individuals who wish to invest in retirement plans
should contact their tax and financial advisors regarding
their specific legal or tax situation.
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