Publication 936 - Home Mortgage Interest Deduction - Department Of Treasury - 2004 Page 9
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16Table 1. Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage
Interest For the Current Year
See the Table 1 Instructions.
(Keep for your records.)
Part I
Qualified Loan Limit
1.
Enter the average balance of all your grandfathered debt. See line 1 instructions . .
1.
2.
Enter the average balance of all your home acquisition debt. See line 2 instructions
2.
3.
Enter $1,000,000 ($500,000 if married filing separately) . . . . . . . . . . . . . . . . . . . . .
3.
4.
Enter the larger of the amount on line 1 or the amount on line 3 . . . . . . . . . . . . . . . .
4.
5.
Add the amounts on lines 1 and 2. Enter the total here . . . . . . . . . . . . . . . . . . . . . .
5.
6.
Enter the smaller of the amount on line 4 or the amount on line 5 . . . . . . . . . . . . . .
6.
7.
Enter $100,000 ($50,000 if married filing separately).
See the line 7 instructions for a limit that may apply . . . . . . . . . . . . . . . . . . . . . . . . .
7.
8.
Add the amounts on lines 6 and 7. Enter the total. This is your qualified loan limit . .
8.
Part II
Deductible Home Mortgage Interest
9.
Enter the total of the average balances of all mortgages on all qualified homes.
See line 9 instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
•
If line 8 is less than line 9, go on to line 10.
•
If line 8 is equal to or more than line 9, stop here. All of your interest
on all the mortgages included on line 9 is deductible as home mortgage
interest on Schedule A (Form 1040).
10. Enter the total amount of interest that you paid. See line 10 instructions . . . . . . . . . . . 10.
11. Divide the amount on line 8 by the amount on line 9.
× .
Enter the result as a decimal amount (rounded to three places) . . . . . . . . . . . . . . . . . 11.
12. Multiply the amount on line 10 by the decimal amount on line 11.
Enter the result. This is your deductible home mortgage interest.
Enter this amount on Schedule A (Form 1040) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
13. Subtract the amount on line 12 from the amount on line 10. Enter the result.
This is not home mortgage interest. See line 13 instructions . . . . . . . . . . . . . . . . . . . 13.
Acquiring an interest in a home because of
for architects and design plans, and required
may qualify as home equity debt. In addition,
a divorce. If you incur debt to acquire the
building permits.
debt you incurred to buy, build, or substantially
interest of a spouse or former spouse in a home,
improve your home, to the extent it is more than
Substantial improvement. An improve-
because of a divorce or legal separation, you
the home acquisition debt limit (discussed ear-
ment is substantial if it:
can treat that debt as home acquisition debt.
lier), may qualify as home equity debt.
•
Adds to the value of your home,
Part of home not a qualified home. To
Home equity debt is a mortgage you took out
•
figure your home acquisition debt, you must
after October 13, 1987, that:
Prolongs your home’s useful life, or
divide the cost of your home and improvements
•
•
Adapts your home to new uses.
between the part of your home that is a qualified
Does not qualify as home acquisition debt
home and any part that is not a qualified home.
or as grandfathered debt, and
Repairs that maintain your home in good con-
See Divided use of your home under Qualified
•
Is secured by your qualified home.
dition, such as repainting your home, are not
Home in Part I.
substantial improvements. However, if you paint
your home as part of a renovation that substan-
Example. You bought your home for cash
Home Equity Debt
tially improves your qualified home, you can
10 years ago. You did not have a mortgage on
include the painting costs in the cost of the
your home until last year, when you took out a
If you took out a loan for reasons other than to
improvements.
$20,000 loan, secured by your home, to pay for
buy, build, or substantially improve your home, it
Page 9
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