Publication 936 - Home Mortgage Interest Deduction - Department Of Treasury

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Comments and suggestions. We welcome

Debt not secured by home. A debt is not

The mortgage is a secured debt on a qual-

your comments about this publication and your

ified home in which you have an owner-

secured by your home if it is secured solely

suggestions for future editions.

ship interest. “Secured debt” and “qualified

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

home” are explained later.

a security interest that attaches to the property

You can write to us at the following address:

without your consent (such as a mechanic’s lien

or judgment lien).

You cannot deduct interest you pay for someone

Internal Revenue Service

A debt is not secured by your home if it once

Individual Forms and Publications Branch

else if you are not legally liable to pay it. Both

was, but is no longer secured by your home.

you and the lender must intend that the loan be

SE:W:CAR:MP:T:I

repaid.

Wraparound mortgage. This is not a se-

1111 Constitution Ave. NW, IR-6526

cured debt unless it is recorded or otherwise

Washington, DC 20224

Fully deductible interest. In most cases, you

perfected under state law.

can deduct all of your home mortgage interest.

We respond to many letters by telephone.

Example. Beth owns a home subject to a

How much you can deduct depends on the date

Therefore, it would be helpful if you would in-

of the mortgage, the amount of the mortgage,

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

clude your daytime phone number, including the

and how you use the mortgage proceeds.

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

area code, in your correspondence.

$40,000 mortgage. Beth continues to make the

If all of your mortgages fit into one or more of

You can email us at *taxforms@irs.gov. (The

payments on the $40,000 note. John pays

the following three categories at all times during

asterisk must be included in the address.)

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

the year, you can deduct all of the interest on

Please put “Publications Comment” on the sub-

secured by a wraparound mortgage on the

those mortgages. (If any one mortgage fits into

ject line. Although we cannot respond individu-

home. Beth does not record or otherwise perfect

more than one category, add the debt that fits in

ally to each email, we do appreciate your

the $90,000 mortgage under the state law that

each category to your other debt in the same

feedback and will consider your comments as

applies. Therefore, the mortgage is not a se-

category.) If one or more of your mortgages

we revise our tax products.

cured debt and John cannot deduct any of the

does not fit into any of these categories, use Part

interest he pays on it as home mortgage inter-

Ordering forms and publications. Visit

II of this publication to figure the amount of

est.

to download forms and

interest you can deduct.

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

The three categories are as follows.

Choice to treat the debt as not secured by

address below and receive a response within 10

your home. You can choose to treat any debt

1. Mortgages you took out on or before Octo-

days after your request is received.

secured by your qualified home as not secured

ber 13, 1987 (called grandfathered debt).

by the home. This treatment begins with the tax

year for which you make the choice and contin-

Internal Revenue Service

2. Mortgages you took out after October 13,

ues for all later tax years. You can revoke your

1201 N. Mitsubishi Motorway

1987, to buy, build, or improve your home

choice only with the consent of the Internal Rev-

Bloomington, IL 61705-6613

(called home acquisition debt), but only if

enue Service (IRS).

throughout 2008 these mortgages plus any

You may want to treat a debt as not secured

grandfathered debt totaled $1 million or

Tax questions. If you have a tax question,

by your home if the interest on that debt is fully

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

check the information available on

deductible (for example, as a business expense)

arately).

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

whether or not it qualifies as home mortgage

questions sent to either of the above addresses.

3. Mortgages you took out after October 13,

interest. This may allow you, if the limits in Part II

1987, other than to buy, build, or improve

apply, more of a deduction for interest on other

Useful Items

your home (called home equity debt), but

debts that are deductible only as home mort-

You may want to see:

only if throughout 2008 these mortgages

gage interest.

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

Cooperative apartment owner. If you own

Publication

married filing separately) and totaled no

stock in a cooperative housing corporation, see

more than the fair market value of your

523

Selling Your Home

the Special Rule for Tenant-Stockholders in Co-

home reduced by (1) and (2).

operative Housing Corporations, near the end of

527

Residential Rental Property

The dollar limits for the second and third catego-

this Part I.

530

Tax Information for First-Time

ries apply to the combined mortgages on your

Qualified Home

Homeowners

main home and second home.

See

Part II

for more detailed definitions of

535

Business Expenses

For you to take a home mortgage interest de-

grandfathered, home acquisition, and home eq-

See

How To Get Tax Help,

near the end of

duction, your debt must be secured by a quali-

uity debt.

this publication, for information about getting

fied home. This means your main home or your

these publications.

You can use Figure A to check whether your

second home. A home includes a house, condo-

home mortgage interest is fully deductible.

minium, cooperative, mobile home, house

trailer, boat, or similar property that has sleep-

Secured Debt

Part I. Home

ing, cooking, and toilet facilities.

The interest you pay on a mortgage on a

You can deduct your home mortgage interest

Mortgage Interest

home other than your main or second home may

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

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-

This part explains what you can deduct as home

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

ble purposes. Otherwise, it is considered per-

mortgage interest. It includes discussions on

contract) that:

sonal interest and is not deductible.

points, mortgage insurance premiums, and how

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Makes your ownership in a qualified home

to report deductible interest on your tax return.

Main home. You can have only one main

security for payment of the debt,

Generally, home mortgage interest is any

home at any one time. This is the home where

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interest you pay on a loan secured by your home

Provides, in case of default, that your

you ordinarily live most of the time.

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

home could satisfy the debt, and

Second home. A second home is a home that

be a mortgage to buy your home, a second

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Is recorded or is otherwise perfected

you choose to treat as your second home.

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

under any state or local law that applies.

You can deduct home mortgage interest if all

Second home not rented out. If you have

the following conditions are met.

a second home that you do not hold out for rent

In other words, your mortgage is a secured

or resale to others at any time during the year,

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You file Form 1040 and itemize deduc-

debt if you put your home up as collateral to

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

tions on Schedule A (Form 1040).

protect the interests of the lender. If you cannot

have to use the home during the year.

pay the debt, your home can then serve as

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You are legally liable for the loan.

Second home rented out. If you have a

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

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There is a true debtor-creditor relationship

In this publication, mortgage will refer to secured

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

between you and the lender.

debt.

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

Publication 936 (2008)

Page 2

Publication 936 - Home Mortgage Interest Deduction - Department Of Treasury - 2008 Page 2

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