J.K. Lasser's 1001 Deductions and Tax Breaks 2022, 2nd Edition

CHAPTER 11Borrowing and Interest

1. Home Mortgage Interest
2. Student Loan Interest
3. Borrowing from Retirement Plans
4. Investment‐Related Interest
5. Business Interest
6. Accrued Interest on Bond Purchases
7. Below‐Market Loans
8. Bad Debts
9. Debt Forgiveness

With the prices of things rising, jobs tight or gone as a result of the coronavirus, and investments performance unsteady, it seems that every paycheck is stretched to the limit. We often choose or are forced to rely on credit to pay for the things we want or need. Fortunately, interest rates are at historic lows. And whether you are a borrower or a lender, you may be eligible for tax breaks with respect to certain loan activities.

While interest on credit cards for consumer purchases is not deductible, interest on certain other borrowing is tax favored, as explained in this chapter. For more information, see IRS Publication 550, Investment Income and Expenses, and IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments.

Home Mortgage Interest

If you are a homeowner repaying a mortgage, you can deduct the interest portion of your payments. There is no dollar limit on how much interest you can deduct. However, the law limits the amount of borrowing you can take into account in figuring your deductible interest on loans taken after October 14, 1987.

• For acquisition indebtedness obtained before December 15, 2017, to buy, build, or substantially renovate your home: $1 million ($500,000 for a married person filing ...