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bananawanna2
New Member

You need to separate regular mortgage from home equity

 
1 Reply
MichaelL1
Level 15

You need to separate regular mortgage from home equity

It will all appear on line 10 of the Sch A.

By listing them separately in TurboTax, it will go over them to make sure they are deductible. If you know they are deductible you can enter them as one amount.

Mortgage interest is any interest you pay on a loan secured by a main home or second home. These loans include:

  • A mortgage to buy your home
  • A second mortgage
  • A line of credit
  • A home equity loan
Home equity loan interest (this will be more restrictive for 2018 tax returns) 

If you take out a home equity loan, your interest payments may qualify for a deduction in addition to your mortgage interest. To qualify, you must have obtained the loan after Oct 13, 1987 and it must also be secured by your home.

For tax purposes, only the balance of the loan that is the smaller of $100,000 or your equity in the home qualifies for the interest deduction. Your equity is equal to the amount you could sell the home for minus the amount you still owe on the mortgage.

Home Mortgage

Deduction limitations

To prevent taxpayers from claiming a deduction for luxurious homes, the law limits the deduction to the interest that you pay on up to $1 million in total mortgage balances. This $1 million limitation applies to the total of both mortgages.

For example, if you owe $600,000 on your main home and $800,000 on a vacation home, you cannot deduct the interest you pay that relates to the excess $400,000. In some cases, the excess interest may qualify for a deduction if it relates to a home equity loan.

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