Publication 936 - Home Mortgage Interest Deduction

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Debt not secured by home. A debt is not

Part II explains how your deduction for home

You file Form 1040 and itemize deduc-

mortgage interest may be limited. It contains

tions on Schedule A (Form 1040).

secured by your home if it is secured solely

Table 1, which is a worksheet you can use to

because of a lien on your general assets or if it is

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The mortgage is a secured debt on a qual-

figure the limit on your deduction.

a security interest that attaches to the property

ified home in which you have an owner-

without your consent (such as a mechanic’s lien

ship interest.

Secured Debt

and

Qualified

Comments and suggestions. We welcome

or judgment lien).

Home

are explained later.

your comments about this publication and your

A debt is not secured by your home if it once

suggestions for future editions.

was, but is no longer secured by your home.

You can write to us at the following address:

Both you and the lender must intend that the

Wraparound mortgage. This is not a se-

loan be repaid.

Internal Revenue Service

cured debt unless it is recorded or otherwise

Individual Forms and Publications Branch

perfected under state law.

Fully deductible interest. In most cases, you

SE:W:CAR:MP:T:I

can deduct all of your home mortgage interest.

Example. Beth owns a home subject to a

1111 Constitution Ave. NW, IR-6526

How much you can deduct depends on the date

mortgage of $40,000. She sells the home for

Washington, DC 20224

of the mortgage, the amount of the mortgage,

$100,000 to John, who takes it subject to the

and how you use the mortgage proceeds.

$40,000 mortgage. Beth continues to make the

We respond to many letters by telephone.

If all of your mortgages fit into one or more of

payments on the $40,000 note. John pays

Therefore, it would be helpful if you would in-

the following three categories at all times during

$10,000 down and gives Beth a $90,000 note

clude your daytime phone number, including the

the year, you can deduct all of the interest on

secured by a wraparound mortgage on the

area code, in your correspondence.

those mortgages. (If any one mortgage fits into

home. Beth does not record or otherwise perfect

more than one category, add the debt that fits in

You can email us at taxforms@irs.gov.

the $90,000 mortgage under the state law that

Please put “Publications Comment” on the sub-

each category to your other debt in the same

applies. Therefore, the mortgage is not a se-

category.) If one or more of your mortgages

ject line. You can also send us comments from

cured debt and John cannot deduct any of the

does not fit into any of these categories, use

Part

Select “Comment on

interest he pays on it as home mortgage inter-

Tax Forms and Publications” under “Information

of this publication to figure the amount of

est.

interest you can deduct.

about.”

Choice to treat the debt as not secured by

The three categories are as follows.

Although we cannot respond individually to

your home. You can choose to treat any debt

each comment received, we do appreciate your

1. Mortgages you took out on or before Octo-

secured by your qualified home as not secured

feedback and will consider your comments as

ber 13, 1987 (called grandfathered debt).

by the home. This treatment begins with the tax

we revise our tax products.

year for which you make the choice and contin-

2. Mortgages you took out after October 13,

Ordering forms and publications. Visit

ues for all later tax years. You can revoke your

1987, to buy, build, or improve your home

to download forms and

choice only with the consent of the Internal Rev-

(called home acquisition debt), but only if

publications, call 1-800-829-3676, or write to the

enue Service (IRS).

throughout 2011 these mortgages plus any

address below and receive a response within 10

You may want to treat a debt as not secured

grandfathered debt totaled $1 million or

days after your request is received.

by your home if the interest on that debt is fully

less ($500,000 or less if married filing sep-

deductible (for example, as a business expense)

Internal Revenue Service

arately).

whether or not it qualifies as home mortgage

1201 N. Mitsubishi Motorway

interest. This may allow you, if the limits in

Part II

3. Mortgages you took out after October 13,

Bloomington, IL 61705-6613

apply, more of a deduction for interest on other

1987, other than to buy, build, or improve

debts that are deductible only as home mort-

your home (called home equity debt), but

Tax questions. If you have a tax question,

gage interest.

only if throughout 2011 these mortgages

check the information available on IRS.gov or

totaled $100,000 or less ($50,000 or less if

Cooperative apartment owner. If you own

call 1-800-829-1040. We cannot answer tax

married filing separately) and totaled no

stock in a cooperative housing corporation, see

questions sent to either of the above addresses.

more than the fair market value of your

the

Special Rule for Tenant-Stockholders in Co-

home reduced by (1) and (2).

operative Housing

Corporations, near the end of

Useful Items

this Part I.

The dollar limits for the second and third catego-

You may want to see:

ries apply to the combined mortgages on your

Qualified Home

main home and second home.

Publication

See

Part II

for more detailed definitions of

523

Selling Your Home

For you to take a home mortgage interest de-

grandfathered, home acquisition, and home eq-

duction, your debt must be secured by a quali-

uity debt.

527

Residential Rental Property

fied home. This means your main home or your

You can use Figure A to check whether your

530

Tax Information for Homeowners

second home. A home includes a house, condo-

home mortgage interest is fully deductible.

minium, cooperative, mobile home, house

535

Business Expenses

trailer, boat, or similar property that has sleep-

Secured Debt

ing, cooking, and toilet facilities.

See

How To Get Tax Help

near the end of

The interest you pay on a mortgage on a

You can deduct your home mortgage interest

this publication, for information about getting

home other than your main or second home may

only if your mortgage is a secured debt. A se-

these publications.

be deductible if the proceeds of the loan were

cured debt is one in which you sign an instru-

used for business, investment, or other deducti-

ment (such as a mortgage, deed of trust, or land

ble purposes. Otherwise, it is considered per-

contract) that:

sonal interest and is not deductible.

Part I. Home

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Makes your ownership in a qualified home

Main home. You can have only one main

security for payment of the debt,

Mortgage Interest

home at any one time. This is the home where

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Provides, in case of default, that your

you ordinarily live most of the time.

home could satisfy the debt, and

This part explains what you can deduct as home

Second home. A second home is a home that

mortgage interest. It includes discussions on

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Is recorded or is otherwise perfected

you choose to treat as your second home.

points, mortgage insurance premiums, and how

under any state or local law that applies.

Second home not rented out. If you have

to report deductible interest on your tax return.

a second home that you do not hold out for rent

Generally, home mortgage interest is any

In other words, your mortgage is a secured

or resale to others at any time during the year,

interest you pay on a loan secured by your home

debt if you put your home up as collateral to

you can treat it as a qualified home. You do not

(main home or a second home). The loan may

protect the interests of the lender. If you cannot

have to use the home during the year.

be a mortgage to buy your home, a second

pay the debt, your home can then serve as

mortgage, a line of credit, or a home equity loan.

Second home rented out. If you have a

payment to the lender to satisfy (pay) the debt.

You can deduct home mortgage interest if all

In this publication, mortgage will refer to secured

second home and rent it out part of the year, you

the following conditions are met.

debt.

also must use it as a home during the year for it

Page 2

Publication 936 (2011)

Publication 936 - Home Mortgage Interest Deduction - 2011 Page 2

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