You don't deduct it anywhere. When you're calculating your capital gain from the sale of a home, the amount you owe on your mortgage is irrelevant. Your capital gain is your net sale proceeds minus your adjusted cost basis. Your adjusted cost basis is your original purchase price, plus the value of any capital improvements you've made to the property since your purchase (for example, a room addition).
See this IRS reference: https://www.irs.gov/faqs/capital-gains-losses-and-sale-of-home/property-basis-sale-of-home-etc/prope...
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
