Home Mortgage Interest
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Home Mortgage Interest
Acquisition indebtedness is debt incurred in acquiring, constructing, or substantially improving a qualified residence and secured by such residence. Any such debt that is refinanced is treated as acquisition debt to the extent that it does not exceed the principal amount of acquisition debt immediately before refinancing. Home equity indebtedness is all debt (other than acquisition debt) that is secured by a qualified residence to the extent it does not exceed the fair market value of the residence reduced by any acquisition indebtedness. Interest on such debt is deductible even if the proceeds are used for personal expenditures. You are generally limited to deductions of interest on up to $1 million of debt on a primary and secondary home plus $100,000 of home equity indebtedness. (See IRS publication 936 as this can get complicated.) These limitations are for most taxpayers, but half these amounts ($500,0000 and $50,000) for married filing separately.
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