Home Mortgage Interest

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Sandy Botkin
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Taxbot, deductr, deductor, deducter, taxes, business taxes, how to reduce my business taxes, business tax write offs, tax deductions, car tax deductions, sandy botkin, irs, irs audit, CPA, mobile expense tracker, mobile mileage tracker, investment property, flipping homes, investment homes, home repair, deducting home repairs, home tax write offsDeducting Home mortgage Interest:

There seems to be a lot of confusion about deducting home mortgage interest and there are traps that MANY people don’t know.

 

Home mortgage interest is deductible IF:

  1. It is use to either acquire or improve your principal residence or a second home (only 1). Thus, if you refinance your home, only the original acquisition debt qualifies as home mortgage interest. Any other extra debt incurred is NOT home mortgage interest.
  2. The debt must be on the home that you are acquiring or improving. Thus, your debt doesn’t qualify if you use it on your primary residence to buy a second home.
  3. This is surprising: there is a limit of $1,000,000 of home mortgage debt that you can deduct the interest on. In addition, you can get an extra $100,000 of debt for “home equity,” which can be used for any purpose. Thus, the total amount of indebtedness where you can deduct interest will be limited to $1.1 million.
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