@fanfare - mortgage interest can be non-deductible for two reasons
1) it can be non -aquisition debt which was not used to improve the residence. As discussed above, the related principle amortizes first
2) the balance of aquisition debt exceeds a cap. Depending on the date the money was borrowed, this cap is $1,000,000 or $750,000. The Mortgage Interest Limitation Worksheet determines how much of the aquisition interest is dedutible should the cap be breached. Note further that Line 14 is dependent on Line 11 divided by Line 12. Line 11 is the aquisition debt limit. Line 12 is the total amount of aquisition debt. Line 13 is the interest paid on aquisition debt. The worksheet has nothing to do with debt or the related interest that is non-aquisition debt - THAT is why there is no mention of debt priorities.
