How much home interest can i deduct?

Home Mortgage Interest
This part explains what you can deduct as home mortgage interest. It includes discussions on points, mortgage insurance premiums, and how to report deductible interest on your tax return.

Generally, home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home). The loan may be a mortgage to buy your home, a second mortgage, a line of credit, or a home equity loan.

You can deduct home mortgage interest if all the following conditions are met.

You file Form 1040 and itemize deductions on Schedule A (Form 1040).

You are legally liable for the loan.

There is a true debtor-creditor relationship between you and the lender.

The mortgage is a secured debt on a qualified home in which you have an ownership interest. “Secured debt” and “qualified home” are explained later.

In most cases, you can deduct all mortgage interest the is less than $1,000,000

You neee to have been  liable personally for the mortgage debt to deduct it.  Then, the loan must be a bona fide loan. Also, you can deduct it for a loan for a second home, an improvement on a home or any repairs.  Other than that, for a home equity loan for other purposes, you need to get a loan under $100,000 to be deductible and the amount of loan cannot exceed the amount of the fair market value of your equity.

The interest you pay on a mortgage on a home other than your main or second home may be deductible if the proceeds of the loan were used for business, investment, or other deductible purposes. Otherwise, it is considered personal interest and is not deductible.