Mortgage Interest Deduction

Definition

Section 163(h)(3) allows a deduction for interest on up to $750,000 of acquisition indebtedness ($1,000,000 if originated before December 15, 2017) on up to two residences. Home equity interest is generally not deductible unless used to buy, build, or substantially improve the residence.

Examples

• A homeowner with $20,000 of qualifying acquisition-debt interest deducts the full amount as an itemized deduction.