No, not all of the mortgage interest is deductible.
- 'If you use the proceeds of a loan for more than one type of expense, you must allocate the interest based on the use of the loan's proceeds.'
In general, you allocate interest on a loan the same way you allocate the loan proceeds. You allocate loan proceeds by tracing disbursements to specific uses.
More information can be reviewed in IRS Publication 535, Chapter 4. (IRS Publication 527 refers you to 535).
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