mortgage deduction

Is The $1,100,000 Limitation On Mortgage Debt For Purposes Of Determining Deductible Interest Expense Applied On A Per-Taxpayer Or A Per-Residence Basis?

Is The $1,100,000 Limitation On Mortgage Debt For Purposes Of Determining Deductible Interest Expense Applied On A Per-Taxpayer Or A Per-Residence Basis?Issue

Is the $1,100,000 limitation on mortgage debt for purposes of determining deductible interest expense applied on a per-taxpayer or a per-residence basis?

Related Tax Rules or Regulations

Internal Revenue Code Section 163(h)(3) allows a deduction for qualified residence interest on up to $1,000,000 of acquisition indebtedness and $100,000 of home equity indebtedness. Should your mortgage balance (or balances, since the mortgage interest deduction is permitted on up to two homes) exceed the statutory limitations, the mortgage interest deduction is limited to the amount applicable to only $1,100,000 worth of debt.

Case Study

HOW MUCH OF MY MORTGAGE CAN I REALLY DEDUCT?

What can taxpayers deduct from their mortgage payments? What portion of a payment consisting of principal, interest, taxes and insurance, if any, is deductible? To deduct the expenses of owning a home, at least those costs paid in your mortgage payment, taxpayers must first itemize deductions.

Simply put, interest paid on a mortgage is tax deductible. Points that are paid to lower the interest rate are also deductible. Taxpayers can deduct the interest paid on first and second mortgages up to $1,000,000 in mortgage debt (the limit is $500,000 if married and filing separately). Any interest paid on first or second mortgages over this amount is not tax deductible. If the loan is not a secured debt on your home, it is considered a personal loan, and the interest you pay generally isn’t deductible.

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