Chapter 15 Itemized Deduction for Interest Expenses

On Schedule A of Form 1040, you may deduct three types of interest charges:

  • Home mortgage interest, which includes interest on qualifying home acquisition loans (15.2) and home equity loans (15.3)
  • Points (15.8)
  • Investment interest (15.10), but only up to the amount of net investment income (15.10).

Premiums paid in 2016 for qualified mortgage insurance on a principal or second residence are deductible as interest, subject to a phaseout, but the deduction will not be allowed after 2016 unless Congress extends the law authorizing the deduction (15.6).

Interest on personal loans (such as loans to buy autos and other personal items and credit card finance charges) is not deductible with the exception of qualifying student loan interest; see Chapter 33.

Interest on loans for business purposes is fully deductible on Schedule C. Interest on loans related to rental property is fully deductible from rental income on Schedule E. Whether ...

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