Itemized Deductions: Interest Paid

Learn about the types of interest that can be deducted as itemized deductions on your tax return. This guide covers home mortgage interest, including acquisition and grandfathered debt, as well as investment interest. It explains the rules for deducting interest on various types of debt and clarifies which interest payments are not deductible, such as personal loans and credit card interest.

Highlights:

• Home Mortgage Interest: Deductible for acquisition debt up to $750,000, with special rules for grandfathered debt and refinanced loans.

• Investment Interest: Deductible when used to buy investment property, limited to net investment income.

• Non-Deductible Interest: Includes personal interest, such as credit card debt and auto loans not used for business.

• Home Equity Debt: Interest is generally not deductible unless used to buy, build, or improve the home securing the loan.