🏠 Schedule A: Mortgage Interest

If you have a mortgage, you may be eligible to deduct the interest paid on that loan under Schedule A — but with specific limitations and important nuances.

💵 Mortgage Debt Limit

Mortgage interest deductions are allowed only up to a certain amount of acquisition indebtedness:

• For loans originated before December 15, 2017: $1,000,000 ($500,000 for Married Filing Separately);

• For loans originated after December 15, 2017: $750,000 ($375,000 for Married Filing Separately).

📍 Example

Assume you paid $30,000 in mortgage interest for the year. You’ll need to determine what portion is deductible:

Loan balance: $950,000

Applicable limit: $750,000

Deductible ratio: $750,000 ÷ $950,000 = 0.789 (78.9%)

Deductible interest: $30,000 × 0.789 = $23,670

The remaining interest — attributable to the portion of the loan exceeding the limit — is not deductible.

🌍 Foreign Real Estate

Mortgage interest on loans secured by foreign real estate may be deductible, provided:

• The property qualifies as a main home or a second home under the qualified residence rules;

• The loan is secured by that property;

• The acquisition debt does not exceed the applicable limit — $1,000,000 (pre-2018) or $750,000 (post-2017).

🔐 Starting in 2026, mortgage insurance premiums for qualified residences will once again be deductible — an additional opportunity to reduce taxable income.

🔍 Conclusion

Mortgage interest remains one of the most valuable itemized deductions in Schedule A — but strict debt limits apply. For new mortgages, only interest paid on the first $750,000 of acquisition debt is eligible. If your loan exceeds this cap, the deduction is calculated proportionally, not on the full amount paid.

➡️ In our next post, we’ll break down the new limits and opportunities for charitable contribution deductions under OBBBA, and how to properly substantiate your donations to the IRS.

#USTaxCIS