Itemized Deductions-Mortgage Expense Deduction

Question 1

What is the maximum mortgage debt amount for which interest is fully deductible?

Answer 1

$750,000

The limit is $1 million for mortgages taken out before December 15, 2017.

Question 2

What types of properties can the mortgage expense deduction apply to?

Answer 2

First home and second home

The deduction applies if the debt is used to buy, build, or improve these homes.

Question 3

What conditions must be met for a taxpayer to deduct interest on a secondary residence?

Answer 3

Must have lived there more than 14 days or 10% of total rental days

The greater of the two conditions applies.

Question 4

How are home equity loans treated under the mortgage expense deduction?

Answer 4

Included if used for building or improving the home

Home equity loans not used for these purposes do not qualify.

Question 5

What should a taxpayer do if their total mortgage amounts exceed $750,000?

Answer 5

Divide $750,000 by total mortgage amounts and multiply by qualified expense amount

This calculation determines the deductible interest amount.

Question 6

True or False: Interest paid on mortgage debt is only deductible for the taxpayer’s first home.

Answer 6

False

Interest is deductible for both first and second homes under certain conditions.

Question 7

Fill in the blank: The interest on mortgage debt is fully deductible paid on amounts up to _______.

Answer 7

$750,000

Question 8

What is the threshold for a taxpayer to live in a secondary residence to claim the interest deduction?

Answer 8

More than 14 days or 10% of total rental days

This ensures the property is considered a residence rather than purely rental.