When the mortgage exceeds the SI million debt limit, the 1RS concluded that the amount of qualified residence interest
for each taxpayer is determined by multiplying the amount of interest paid by the taxpayer by a fraction, the numerator of which is $1 million and the denominator of which is the average mortgage debt outstanding during the year.
163(h)(3) treatment of mortgage insurance premiums as qualified residence interest
, which permits a taxpayer whose income is below certain thresholds to deduct the cost of premiums on mortgage insurance purchased in connection with acquisition indebtedness on the taxpayer's principal residence.
These amounts continue to be treated as qualified residence interest
under another extension (IRC section 163), but the deduction phases out for taxpayers with AGI from $100,000 to $109,000 for joint filers (half these amounts for married taxpayers filing separately).
Extension of mortgage insurance premiums treated as qualified residence interest
For 2013, the provision allowing the discharge of a qualified principal residence debt to be excluded from income (up to $2 million) is available, as is the provision allowing mortgage insurance premiums to be deducted as qualified residence interest
Special rules limit the deduction of personal interest (see Q 7923), qualified residence interest
(see Q 7924), investment interest (see Q 7925), student loan interest (see Q 7930) and interest subject to the passive loss rules (see Q 7913, Q 7914).
For example, investment interest is generally deductible only to the extent of investment income, qualified residence interest
is generally deductible in full, trade or business interest is generally deductible as a business expense, and personal interest is not deductible at all (except student loan interest; see page 378).
the total amount of acquisition debt that can give rise to qualified residence interest
is $1 million .
You even can finance the acquisition of additional land, adjacent to your home, and deduct the interest as qualified residence interest
Mortgage interest must meet the definition of qualified residence interest
Taxpayers may itemize, for regular income tax purposes, qualified residence interest
on up to two residences with acquisition indebtedness up to $1 million and home equity indebtedness up to $100,000.
Special rules limit the deduction of personal interest (see Q 1302), qualified residence interest
(see Q 1303), investment interest (see Q 1304), student loan interest (see Q 1309) and interest subject to the passive loss rule (see Q 1292, Q 1293).