Deducting Mortgage Interest on a Personal Residence

When you own a home and you pay a mortgage on it, then the interest on that mortgage may be deductible on your tax return.  Any interest paid on a line of credit or home equity loan also counts as mortgage interest.  You can deduct mortgage interest only if you meet the following:

1.  You must file form 1040 and itemize on Schedule A

2.  You must be legally liable for the loan

3.  The mortgage must be a secured debt on a qualified home in which you have an ownership interest.

A qualified home is your main home or second home and a home includes a condo, co-op, mobile home, or boat.

You can also deduct late payment charges from your mortgage as mortgage interest and any prepayment penalties you may have paid. 

Mortgage interest is reported to you on form 1098 each year, as long as the total interest paid was more than $600. 

There are limitations on how much home mortgage interest can be deducted.  The total amount of debt you can treat as home acquisition debt at any time on your main and second home cannot exceed $1 million.  In addition to the $1 million of home acquisition debt, you may also deduct interest on up to $100,000 of home equity debt.

If you have any questions on whether or not you are correctly deducting your mortgage interest feel free to contact us.  www.huddlestontax.com

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