Mortgage Interest Deduction Limit

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The IRS allows an individual or a married couple to deduct the interest that they paid on their mortgages during the calendar year. However, there are a number of IRS regulations that limit the amount that an individual can claim for the mortgage interest deduction, which can make it difficult for an individual or a married couple to determine the amount that they can legally deduct.

Purchase/Improvement

An individual or a couple is allowed to deduct the interest for the first $1 million of mortgages that were obtained to build, improve or purchase a primary or secondary residence.

Home Equity Loan

An individual or a couple is allowed to deduct the interest for the first $100,000 of mortgages that are for a primary or secondary residence, but are not for building, improving or purchasing the residence.

Joint Mortgages

An individual that holds a mortgage jointly with another individual can only deduct the interest that he actually paid on the mortgage.

Married Filing Separately

The members of a married couple filing separately are allowed to deduct the interest for the first $500,000 of mortgages that were obtained to build, improve or purchase a primary or secondary residence.

Points

An individual or a couple is typically allowed to deduct the interest points paid for a mortgage that was obtained to build, improve or purchase a primary or secondary residence.

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