This part explains what you can deduct as home mortgage interest.
It includes discussions on points and on how to report deductible
interest on your tax return.
Generally, home mortgage interest is any interest you pay on a loan
secured by your home (main home or a second home). The loan may be a
mortgage to buy your home, a second mortgage, a line of credit, or a
home equity loan.
You can deduct home mortgage interest only if you meet all the
- You must file Form 1040 and itemize deductions on Schedule A
- You must be legally liable for the loan. You cannot deduct
payments you make for someone else if you are not legally liable to
make them. Both you and the lender must intend that the loan be
repaid. In addition, there must be a true debtor-creditor relationship
between you and the lender.
- The mortgage must be a secured debt on a qualified home.
"Secured debt" and "qualified home" are explained
Fully deductible interest.
In most cases, you will be able to deduct all of your home mortgage
interest. Whether it is all deductible depends on the date you took
out the mortgage, the amount of the mortgage, and your use of its
If all of your mortgages fit into one or more of the following
three categories at all times during the year, you can deduct all of
the interest on those mortgages. (If any one mortgage fits into more
than one category, add the debt that fits in each category to your
other debt in the same category.) If one or more of your mortgages
does not fit into any of these categories, use Part II of
this publication to figure the amount of interest you can deduct.
The three categories are as follows.
- Mortgages you took out on or before October 13, 1987 (called
- Mortgages you took out after October 13, 1987, to buy,
build, or improve your home (called home acquisition debt),
but only if throughout 2001 these mortgages plus any grandfathered
debt totaled $1 million or less ($500,000 or less if married filing
- Mortgages you took out after October 13, 1987, other than to
buy, build, or improve your home (called home equity debt),
but only if throughout 2001 these mortgages totaled $100,000 or less
($50,000 or less if married filing separately) and totaled
no more than the fair market value of your home reduced by (1) and
The dollar limits for the second and third categories apply to
the combined mortgages on your main home and second home.
See Part II for more detailed definitions of
grandfathered, home acquisition, and home equity debt.
You can use Figure A to check whether your home mortgage
interest is fully deductible.
Figure A. Is My Home Mortgage Interest Fully Deductible?
You can deduct your home mortgage interest only if your mortgage is
a secured debt. A secured debt is one in which you sign an instrument
(such as a mortgage, deed of trust, or land contract) that:
- Makes your ownership in a qualified home security for
payment of the debt,
- Provides, in case of default, that your home could satisfy
the debt, and
- Is recorded or is otherwise perfected under any state or
local law that applies.
In other words, your mortgage is a secured debt if you put your
home up as collateral to protect the interests of the lender. If you
cannot pay the debt, your home can then serve as payment to the lender
to satisfy (pay) the debt. In this publication, mortgage
will refer to secured debt.
Debt not secured by home.
A debt is not secured by your home if it is secured solely because
of a lien on your general assets or if it is a security interest that
attaches to the property without your consent (such as a mechanic's
lien or judgment lien).
A debt is not secured by your home if it once was, but is no longer
secured by your home.
This is not a secured debt unless it is recorded or otherwise
perfected under state law.
Beth owns a home subject to a mortgage of $40,000. She sells the
home for $100,000 to John, who takes it subject to the $40,000
mortgage. Beth continues to make the payments on the $40,000 note.
John pays $10,000 down and gives Beth a $90,000 note secured by a
wraparound mortgage on the home. Beth does not record or otherwise
perfect the $90,000 mortgage under the state law that applies.
Therefore, that mortgage is not a secured debt, and the interest John
pays on it is not deductible as home mortgage interest.
Choice to treat the debt as not secured by your home.
You can choose to treat any debt secured by your qualified home as
not secured by the home. This treatment begins with the tax year for
which you make the choice and continues for all later tax years. You
may revoke your choice only with the consent of the Internal Revenue
You may want to treat a debt as not secured by your home if the
interest on that debt is fully deductible (for example, as a business
expense) whether or not it qualifies as home mortgage interest. This
may allow you, if the limits in Part II apply to you, more
of a deduction for interest on other debts that are deductible only as
home mortgage interest.
Cooperative apartment owner.
If you own stock in a cooperative housing corporation, see the
Special Rule for Tenant-Stockholders in Cooperative Housing
Corporations, near the end of this Part I.
For you to take a home mortgage interest deduction, your debt must
be secured by a qualified home. This means your main home or your
second home. A home includes a house, condominium, cooperative, mobile
home, house trailer, boat, or similar property that has sleeping,
cooking, and toilet facilities.
The interest you pay on a mortgage on a home other than your main
or second home may be deductible if the proceeds of the loan were used
for business, investment, or other deductible purposes. Otherwise, it
is considered personal interest and is not deductible.
You can have only one main home at any one time. Generally, this is
the home where you spend most of your time.
A second home is a home that you choose to treat as your second
Second home not rented out.
If you have a second home that you do not hold out for rent or
resale to others at any time during the year, you can treat it as a
qualified home. You do not have to use the home during the year.
Second home rented out.
If you have a second home and rent it out part of the year, you
also must use it as a home during the year for it to be a qualified
home. You must use this home more than 14 days or more than 10% of the
number of days during the year that the home is rented at a fair
rental, whichever is longer. If you do not use the home long enough,
it is considered rental property and not a second home. For
information on residential rental property, see Publication 527.
More than one second home.
If you have more than one second home, you can treat only one as
the qualified second home during any year. However, you can change the
home you treat as a second home during the year in the following three
- If you get a new home during the year, you can choose to
treat the new home as your second home as of the day you buy
- If your main home no longer qualifies as your main home, you
can choose to treat it as your second home as of the day you stop
using it as your main home.
- If your second home is sold during the year or becomes your
main home, you can choose a new second home as of the day you sell the
old one or begin using it as your main home.
Divided use of your home.
The only part of your home that is considered a qualified home is
the part you use for residential living. If you use part of your home
for other than residential living, such as a home office, you must
allocate the use of your home. You must then divide both the cost and
fair market value of your home between the part that is a qualified
home and the part that is not. Dividing the cost may affect the amount
of your home acquisition debt, which is limited to the cost of your
home plus the cost of any improvements. (See Home Acquisition
Debt in Part II.) Dividing the fair market value may
affect your home equity debt limit, also explained in Part
Renting out part of home.
If you rent out part of a qualified home to another person
(tenant), you can treat the rented part as being used by you for
residential living only if all three of the following conditions
- The rented part of your home is used by the tenant primarily
for residential living.
- The rented part of your home is not a self-contained
residential unit having separate sleeping, cooking, and toilet
- You do not rent (directly or by sublease) the same or
different parts of your home to more than two tenants at any time
during the tax year. If two persons (and dependents of either) share
the same sleeping quarters, they are treated as one tenant.
Office in home.
If you have an office in your home that you use in your business,
see Publication 587,
Business Use of Your Home. It explains
how to figure your deduction for the business use of your home, which
includes the business part of your home mortgage interest.
Home under construction.
You can treat a home under construction as a qualified home for a
period of up to 24 months, but only if it becomes your qualified home
at the time it is ready for occupancy.
The 24-month period can start any time on or after the day
You may be able to continue treating your home as a qualified home
even after it is destroyed in a fire, storm, tornado, earthquake, or
other casualty. This means you can continue to deduct the interest you
pay on your home mortgage, subject to the limits described in this
You can continue treating a destroyed home as a qualified home if,
within a reasonable period of time after the home is destroyed, you:
- Rebuild the destroyed home and move into it, or
- Sell the land on which the home was located.
This rule applies to your main home and to a second home that you
treat as a qualified home.
You can treat a home you own under a time-sharing plan as a
qualified home if it meets all the requirements. A time-sharing plan
is an arrangement between two or more people that limits each person's
interest in the home or right to use it to a certain part of the year.
Rental of time-share.
If you rent out your time-share, it qualifies as a second home only
if you also use it as a home during the year. See Second home
rented out, earlier, for the use requirement. To know whether
you meet that requirement, count your days of use and rental of the
home only during the time you have a right to use it or to receive any
benefits from the rental of it.
If you are married and file a joint return, your qualified home(s)
can be owned either jointly or by only one spouse.
If you are married filing separately and you and your spouse own
more than one home, you can each take into account only one home as a
qualified home. However, if you both consent in writing, then one
spouse can take both the main home and a second home into account.
This section describes certain items that can be included as home
mortgage interest and others that cannot. It also describes certain
special situations that may affect your deduction.
Late payment charge on mortgage payment.
You can deduct as home mortgage interest a late payment charge if
it was not for a specific service in connection with your mortgage
Mortgage prepayment penalty.
If you pay off your home mortgage early, you may have to pay a
penalty. You can deduct that penalty as home mortgage interest
provided the penalty is not for a specific service performed or cost
incurred in connection with your mortgage loan.
Sale of home.
If you sell your home, you can deduct your home mortgage interest
(subject to any limits that apply) paid up to, but not including, the
date of the sale.
John and Peggy Harris sold their home on May 7. Through April 30,
they made home mortgage interest payments of $1,220. The settlement
sheet for the sale of the home showed $50 interest for the 6-day
period in May up to, but not including, the date of sale. Their
mortgage interest deduction is $1,270 ($1,220 + $50).
If you pay interest in advance for a period that goes beyond the
end of the tax year, you must spread this interest over the tax years
to which it applies. You can deduct in each year only the interest
that qualifies as home mortgage interest for that year. However, there
is an exception that applies to points, discussed later.
Mortgage interest credit.
You may be able to claim a mortgage interest credit if you were
issued a mortgage credit certificate (MCC) by a state or local
government. Figure the credit on Form 8396,
Mortgage Interest Credit. If
you take this credit, you must reduce your mortgage interest deduction
by the amount of the credit.
See Form 8396 and Publication 530
for more information on the
mortgage interest credit.
Ministers' and military housing allowance.
If you are a minister or a member of the uniformed services and
receive a housing allowance that is not taxable, you can still deduct
your home mortgage interest.
Mortgage assistance payments.
If you qualify for mortgage assistance payments under section 235
of the National Housing Act, part or all of the interest on your
mortgage may be paid for you. You cannot deduct the interest that is
paid for you.
No other effect on taxes.
Do not include these mortgage assistance payments in your income.
Also, do not use these payments to reduce other deductions, such as
real estate taxes.
Divorced or separated individuals.
If a divorce or separation agreement requires you or your spouse or
former spouse to pay home mortgage interest on a home owned by both of
you, the payment of interest may be alimony. See the discussion of
Payments for jointly-owned home under Alimony in
Divorced or Separated Individuals.
Redeemable ground rents.
In some states (such as Maryland), you may buy your home subject to
a ground rent. A ground rent is an obligation you assume to pay a
fixed amount per year on the property. Under this arrangement, you are
leasing (rather than buying) the land on which your home is located.
If you make annual or periodic rental payments on a redeemable
ground rent, you can deduct them as mortgage interest.
A ground rent is a redeemable ground rent if all of the following
- Your lease, including renewal periods, is for more than 15
- You can freely assign the lease.
- You have a present or future right (under state or local
law) to end the lease and buy the lessor's entire interest in the land
by paying a specific amount.
- The lessor's interest in the land is primarily a security
interest to protect the rental payments to which he or she is
Payments made to end the lease and to buy the lessor's entire
interest in the land are not ground rents. You cannot deduct them.
Nonredeemable ground rent.
Payments on a nonredeemable ground rent are not mortgage interest.
You can deduct them as rent if they are a business expense or if they
are for rental property.
If you live in a house before final settlement on the purchase, any
payments you make for that period are rent and not interest. This is
true even if the settlement papers call them interest. You cannot
deduct these payments as home mortgage interest.
Mortgage proceeds invested in tax-exempt securities.
You cannot deduct the home mortgage interest on grandfathered debt
or home equity debt if you used the proceeds of the mortgage to buy
securities or certificates that produce tax-free income. Grandfathered
debt and home equity debt are defined in Part II of this
Refunds of interest.
If you receive a refund of interest in the same year you paid it,
you must reduce your interest expense by the amount refunded to you.
If you receive a refund of interest you deducted in an earlier year,
you generally must include the refund in income in the year you
receive it. However, you need to include it only up to the amount of
the deduction that reduced your tax in the earlier year. This is true
whether the interest overcharge was refunded to you or was used to
reduce the outstanding principal on your mortgage. If you need to
include the refund in income, report it on line 21, Form 1040.
If you received a refund of interest you overpaid in an earlier
year, you generally will receive a Form 1098, Mortgage Interest
Statement, showing the refund in box 3. For information about
Form 1098, see Mortgage Interest Statement, later.
For more information on how to treat refunds of interest deducted
in earlier years, see Recoveries in Publication 525,
Taxable and Nontaxable Income.
Cooperative apartment owner.
If you own a cooperative apartment, you must reduce your home
mortgage interest deduction by your share of any cash portion of a
patronage dividend that the cooperative receives. The patronage
dividend is a partial refund to the cooperative housing corporation of
mortgage interest it paid in a prior year.
If you receive a Form 1098 from the cooperative housing
corporation, the form should show only the amount you can deduct.
The term "points" is used to describe certain charges paid, or
treated as paid, by a borrower to obtain a home mortgage. Points may
also be called loan origination fees, maximum loan charges, loan
discount, or discount points.
Figure B. Are My Points Fully Deductible This Year?
A borrower is treated as paying any points that a home seller pays
for the borrower's mortgage. See Points paid by the seller,
You generally cannot deduct the full amount of points in the year
paid. Because they are prepaid interest, you generally must deduct
them over the life (term) of the mortgage.
You can fully deduct points in the year paid if you meet all the
following tests. (You can use Figure B as a quick guide to
see whether your points are fully deductible in the year paid.)
- Your loan is secured by your main home. (Your main home is
the one you live in most of the time.)
- Paying points is an established business practice in the
area where the loan was made.
- The points paid were not more than the points generally
charged in that area.
- You use the cash method of accounting. This means you report
income in the year you receive it and deduct expenses in the year you
pay them. Most individuals use this method.
- The points were not paid in place of amounts that ordinarily
are stated separately on the settlement statement, such as appraisal
fees, inspection fees, title fees, attorney fees, and property
- The funds you provided at or before closing, plus any points
the seller paid, were at least as much as the points charged. The
funds you provided do not have to have been applied to the points.
They can include a down payment, an escrow deposit, earnest money, and
other funds you paid at or before closing for any purpose. You cannot
have borrowed these funds from your lender or mortgage broker.
- You use your loan to buy or build your main home.
- The points were computed as a percentage of the principal
amount of the mortgage.
- The amount is clearly shown on the settlement statement (
such as the Uniform Settlement Statement, Form HUD-1) as points
charged for the mortgage. The points may be shown as paid from either
your funds or the seller's.
If you meet all of these tests, you can choose to either fully
deduct the points in the year paid, or deduct them over the life of
Home improvement loan.
You can also fully deduct in the year paid points paid on a loan to
improve your main home, if tests (1) through (6) above are met.
The Exception does
not apply to points you pay on loans secured by your second home. You
can deduct these points only over the life of the loan.
Exception does not apply.
If you do not qualify under the exception, or choose not, to deduct
the full amount of points in the year paid, see Points in
chapter 5 of Publication 535
for the rules on when and how much you
can deduct. However, if the points relate to refinancing a home
mortgage, see Refinancing, later.
Amounts charged for services.
Amounts charged by the lender for specific services connected to
the loan are not interest. Examples of these charges are:
- Appraisal fees,
- Notary fees,
- Preparation costs for the mortgage note or deed of trust,
- Mortgage insurance premiums, and
- VA funding fees.
You cannot deduct these amounts as points either in the year
paid or over the life of the mortgage. For information about the tax
treatment of these amounts and other settlement fees and closing
costs, get Publication 530.
Points paid by the seller.
The term "points" includes loan placement fees that the seller
pays to the lender to arrange financing for the buyer.
Treatment by seller.
The seller cannot deduct these fees as interest. But
they are a selling expense that reduces the amount realized by the
seller. See Publication 523
for information on selling your home.
Treatment by buyer.
The buyer reduces the basis of the home by the amount of the
seller-paid points and treats the points as if he or she had paid
them. If all the tests under the Exception, earlier, are
met, the buyer can deduct the points in the year paid. If any of those
tests is not met, the buyer deducts the points over the life of the
If you need information about the basis of your home, see
or Publication 530.
Funds provided are less than points.
If you meet all the tests in the Exception, earlier,
except that the funds you provided were less than the points charged
to you (test (6)), you can deduct the points in the year paid, up to
the amount of funds you provided. In addition, you can deduct any
points paid by the seller.
When you took out a $100,000 mortgage loan to buy your home in
December, you were charged one point ($1,000). You meet all the tests
for deducting points in the year paid, except the only funds you
provided were a $750 down payment. Of the $1,000 charged for points,
you can deduct $750 in the year paid. You spread the remaining $250
over the life of the mortgage.
The facts are the same as in Example 1, except that the
person who sold you your home also paid one point ($1,000) to help you
get your mortgage. In the year paid, you can deduct $1,750 ($750 of
the amount you were charged plus the $1,000 paid by the seller). You
spread the remaining $250 over the life of the mortgage. You must
reduce the basis of your home by the $1,000 paid by the seller.
If you meet all the tests in the Exception, earlier,
except that the points paid were more than generally paid in your area
( test (3)), you deduct in the year paid only the points that are
generally charged. You must spread any additional points over the life
of the mortgage.
Mortgage ending early.
If you spread your deduction for points over the life of the
mortgage, you can deduct any remaining balance in the year the
mortgage ends. However, if you refinance the mortgage with the same
lender, you cannot deduct any remaining balance of spread points.
Instead, deduct the remaining balance over the term of the new loan.
A mortgage may end early due to a prepayment, refinancing,
foreclosure, or similar event.
Dan paid $3,000 in points in 1993 that he had to spread out over
the 15-year life of the mortgage. He had deducted $1,600 of these
points through 2000.
Dan prepaid his mortgage in full in 2001. He can deduct the
remaining $1,400 of points in 2001.
Generally, points you pay to refinance a mortgage are not
deductible in full in the year you pay them. This is true even if the
new mortgage is secured by your main home.
However, if you use part of the refinanced mortgage proceeds to
improve your main home and you meet the first 6 tests
listed under Exception, earlier, you can fully deduct the
part of the points related to the improvement in the year you paid
them with your own funds. You can deduct the rest of the points over
the life of the loan.
In 1991, Bill Fields got a mortgage to buy a home. In 2001, Bill
refinanced that mortgage with a 15-year $100,000 mortgage loan. The
mortgage is secured by his home. To get the new loan, he had to pay
three points ($3,000). Two points ($2,000) were for prepaid interest,
and one point ($1,000) was charged for services, in place of amounts
that ordinarily are stated separately on the settlement statement.
Bill paid the points out of his private funds, rather than out of the
proceeds of the new loan. The payment of points is an established
practice in the area, and the points charged are not more than the
amount generally charged there. Bill's first payment on the new loan
was due July 1. He made six payments on the loan in 2001 and is a cash
Bill used the funds from the new mortgage to repay his existing
mortgage. Although the new mortgage loan was for Bill's continued
ownership of his main home, it was not for the purchase or improvement
of that home. He cannot deduct all of the points in 2001. He can
deduct two points ($2,000) ratably over the life of the loan. He
deducts $67 [($2,000 × 180 months) × 6 payments] of the
points in 2001. The other point ($1,000) was a fee for services and is
The facts are the same as in Example 1, except that Bill
used $25,000 of the loan proceeds to improve his home and
$75,000 to repay his existing mortgage. Bill deducts 25% ($25,000
× $100,000) of the points ($2,000) in 2001. His deduction is
$500 ($2,000 × 25%).
Bill also deducts the ratable part of the remaining $1,500 ($2,000
- $500) that must be spread over the life of the loan. This is
$50 [($1,500 × 180 months) × 6 payments] in 2001. The
total amount Bill deducts in 2001 is $550 ($500 + $50).
Limits on deduction.
You cannot fully deduct points paid on a mortgage that exceeds the
limits discussed in Part II. See the Table 1
Instructions for line 10.
The mortgage interest statement you receive should show not only
the total interest paid during the year, but also your deductible
points paid during the year. See Mortgage Interest Statement,
Mortgage Interest Statement
If you paid $600 or more of mortgage interest (including certain
points) during the year on any one mortgage, you generally will
receive a Form 1098,
Mortgage Interest Statement,
or a similar statement from the mortgage holder. You will
receive the statement if you pay interest to a person (including a
financial institution or cooperative housing corporation) in the
course of that person's trade or business. A governmental unit is a
person for purposes of furnishing the statement.
You should receive the statement for each year by January 31 of the
following year. A copy of this form will also be sent to the IRS.
The statement will show the total interest you paid during the
year. If you purchased a main home during the year, it also will show
the deductible points paid during the year, including seller-paid
points. However, it should not show any interest that was paid for you
by a government agency.
As a general rule, Form 1098 will include only points that you can
fully deduct in the year paid. However, certain points not included on
Form 1098 also may be deductible, either in the year paid or over the
life of the loan. See the earlier discussion of Points to
determine whether you can deduct points not shown on Form 1098.
Prepaid interest on Form 1098.
If you prepaid interest in 2001 that accrued in full by January 15,
2002, this prepaid interest may be included in box 1 of Form 1098.
However, you cannot deduct the prepaid amount for January 2002 in
2001. (See Prepaid interest, earlier.) You will have to
figure the interest that accrued for 2002 and subtract it from the
amount in box 1. You will include the interest for January 2002 with
other interest you pay for 2002.
If you received a refund of mortgage interest you overpaid in an
earlier year, you generally will receive a Form 1098 showing the
refund in box 3. See Refunds of interest under Special
How To Report
Deduct the home mortgage interest and points reported to you on
Form 1098 on line 10, Schedule A (Form 1040). If you paid more
deductible interest to the financial institution than the amount shown
on Form 1098, show the larger deductible amount on line 10. Attach a
statement explaining the difference and print "See attached" next
to line 10.
Deduct home mortgage interest that was not reported to
you on Form 1098 on line 11 of Schedule A (Form 1040). If you paid
home mortgage interest to the person from whom you bought your home,
show that person's name, address, and social security number (SSN) or
employer identification number (EIN) on the dotted lines next to line
11. The seller must give you this number and you must give the seller
your SSN. A Form W-9, Request for Taxpayer Identification
Number and Certification, can be used for this purpose. Failure
to meet any of these requirements may result in a $50 penalty for each
If you can take a deduction for points that were not
reported to you on Form 1098, deduct those points on line 12 of
Schedule A (Form 1040).
More than one borrower.
If you and at least one other person (other than your spouse if you
file a joint return) were liable for and paid interest on a mortgage
that was for your home, and the other person received a Form 1098
showing the interest that was paid during the year, attach a statement
to your return explaining this. Show how much of the interest each of
you paid, and give the name and address of the person who received the
form. Deduct your share of the interest on line 11 of Schedule A (Form
1040), and print "See attached" next to the line.
Similarly, if you are the payer of record on a mortgage on which
there are other borrowers entitled to a deduction for the interest
shown on the Form 1098 you received, deduct only your share of the
interest on line 10 of Schedule A (Form 1040). You should let each of
the other borrowers know what his or her share is.
Mortgage proceeds used for business or investment.
If your home mortgage interest deduction is limited under the rules
explained in Part II, but all or part of the mortgage
proceeds were used for business, investment, or other deductible
activities, see Table 2 near the end of this publication.
It shows where to deduct the part of your excess interest that is for
those activities. The Table 1 Instructions for line 13 in
Part II explain how to divide the excess interest among the
activities for which the mortgage proceeds were used.
Special Rule for Tenant-Stockholders in Cooperative Housing
A qualified home includes stock in a cooperative housing
corporation owned by a tenant-stockholder. This applies only if the
tenant-stockholder is entitled to live in the house or apartment
because of owning stock in the cooperative.
Cooperative housing corporation.
This is a corporation that meets all of the following conditions.
- The corporation has only one class of stock
- Each of the stockholders, only because of owning the stock,
can live in a house, apartment, or house trailer owned or leased by
- No stockholder can receive any distribution out of capital,
except on a partial or complete liquidation of the corporation.
- The tenant-stockholders must pay at least 80% of the
corporation's gross income for the tax year. For this purpose, gross
income means all income received during the entire tax year, including
any received before the corporation changed to cooperative
Stock used to secure debt.
In some cases, you cannot use your cooperative housing stock to
secure a debt because of either:
- Restrictions under local or state law, or
- Restrictions in the cooperative agreement (other than
restrictions in which the main purpose is to permit the
tenant-stockholder to treat unsecured debt as secured debt).
However, you can treat a debt as secured by the stock to the
extent that the proceeds are used to buy the stock under the
allocation of interest rules. See chapter 5 of Publication 535
details on these rules.
Figuring deductible home mortgage interest.
Generally, if you are a tenant-stockholder, you can deduct payments
you make for your share of the interest paid or incurred by the
cooperative. The interest must be on a debt to buy, build, change,
improve, or maintain the cooperative's housing, or on a debt to buy
Figure your share of this interest by multiplying the total by the
Limits on deduction.
To figure how the limits discussed in Part II apply to
you, treat your share of the cooperative's debt as debt incurred by
you. The cooperative should determine your share of its grandfathered
debt, its home acquisition debt, and its home equity debt. (Your share
of each of these types of debt is equal to the average balance of each
debt multiplied by the fraction just given.) After your share of the
average balance of each type of debt is determined, you include it
with the average balance of that type of debt secured by your stock.
The cooperative should give you a Form 1098 showing your share of
the interest. Use the rules in this publication to determine your
deductible mortgage interest.
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