There is no set dollar amount for deducting interest on a home. However, there are limits. In terms of debt on a home, the IRS classifies it into two categories - acquisition debt, and home equity debt. Acquisition debt is debt incurred to purchase a home. You cannot deduct interest on more than $1,000,000 of acquisition debt. Home equity debt is debt incurred after the purchase of the home, such as a home equity line of credit. You can deduct interest on $100,000 of home equity debt. If you refinance existing debt, the portion of the new loan that was used to pay off the prior loan is still acquisition debt. Additionally, if you have no home equity debt, $100,000 of the acquisition debt can be counted as home equity debt, giving you a maximum of $1,100,000 in home debt that you can deduct the interest on. Finally, you are limited to deducting interest on more than two homes in a given year. For example, assume you sell your primary residence at some point in the year and purchase a new primary residence and you have a beach house. That is three residences, and you cannot deduct interest on all three.
300 weeks ago