Question: Alex purchased his home in 2024, and his average mortgage balance for the year was $900,000. He paid $32,000 in mortgage interest during the year. He is single and wants to know how much of his mortgage interest is deductible on Schedule A (Form 1040), Itemized Deductions.
Answer: Under §163(h)(3)(F)(i)(II), for mortgages taken out after December 15, 2017, the deduction for mortgage interest is limited to the interest paid up to $750,000 of home acquisition debt for single filers. Interest attributable to mortgage debt above this limit is not deductible.
Alex’s average mortgage balance of $900,000 exceeds the allowable limit by $150,000 ($900,000 –- 750,000). To calculate the deductible portion of his interest, apply the following ratio:
$750,000 / $900,000 = 0.833 (or 83.3%)
0.833 × $32,000 = $26,656
Alex may deduct $26,656 of the mortgage interest he paid in 2024 on Schedule A (Form 1040), Itemized Deductions. The remaining $5,344 of interest is not deductible.
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