2017 Publication 936 P936

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Publication 936

Contents

Home
Mortgage
Interest
Deduction

What’s New

Cat. No. 10426G
Department
of the
Treasury
Internal
Revenue
Service

For use in preparing

2017 Returns

.................. 1

Reminders . . . . . . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . 2
Part I. Home Mortgage Interest
Secured Debt . . . . . . . . .
Qualified Home . . . . . . . .
Special Situations . . . . . .
Points . . . . . . . . . . . . .
Form 1098, Mortgage Interest
Statement . . . . . . . . .
How To Report . . . . . . . .
Special Rule for
Tenant-Stockholders in
Cooperative Housing
Corporations . . . . . . .

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Index

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3
4
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5

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Part II. Limits on Home Mortgage
Interest Deduction . . . . . . .
Home Acquisition Debt . . . . .
Home Equity Debt . . . . . . . .
Grandfathered Debt . . . . . . .
Worksheet To Figure Your
Qualified Loan Limit and
Deductible Home Mortgage
Interest For the Current Year
How To Get Tax Help

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What’s New
Mortgage insurance premiums. The itemized deduction for mortgage insurance premiums expired on December 31, 2016.
At the time this publication went to
print, Congress was considering legisCAUTION lation to extend the itemized deduction
for mortgage insurance premiums. To find out if
this legislation was enacted, and for more details, go to IRS.gov/Extenders.

Reminders
Future developments. For the latest information about developments related to Pub. 936,
Home Mortgage Interest Deduction, such as
legislation enacted after it was published, go to
IRS.gov/Pub936.

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Jan 31, 2018

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Introduction
This publication discusses the rules for deducting home mortgage interest.
Part I contains general information on home
mortgage interest, including points. It also explains how to report deductible interest on your
tax return.
Part II explains how your deduction for home
mortgage interest may be limited. It contains
Table 1, which is a worksheet you can use to
figure the limit on your deduction.
Comments and suggestions. We welcome
your comments about this publication and your
suggestions for future editions.
You can send us comments through
IRS.gov/FormComments. Or you can write to:
Internal Revenue Service
Tax Forms and Publications
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224
Although we can’t respond individually to
each comment received, we do appreciate your
feedback and will consider your comments as
we revise our tax forms, instructions, and publications.
Ordering forms and publications. Visit
IRS.gov/FormsPubs to download forms and
publications. Otherwise, you can go to IRS.gov/
OrderForms to order current and prior-year
forms and instructions. Your order should arrive
within 10 business days.
Tax questions. If you have a tax question
not answered by this publication, check
IRS.gov and How To Get Tax Help at the end of
this publication.

Useful Items

You may want to see:
Publication
523 Selling Your Home

Page 2

527 Residential Rental Property
530 Tax Information for Homeowners
535 Business Expenses
See How To Get Tax Help near the end of this
publication, for information about getting these
publications.

Part I. Home
Mortgage Interest
This part explains what you can deduct as
home mortgage interest. It includes discussions
on points and 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 if
all the following conditions are met.
You file Form 1040 and itemize deductions
on Schedule A (Form 1040).
The mortgage is a secured debt on a qualified home in which you have an ownership
interest. Secured Debt and Qualified
Home are explained later.
Both you and the lender must intend that the
loan be repaid.

category.) If one or more of your mortgages
doesn’t 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.
1. Mortgages you took out on or before October 13, 1987 (called grandfathered debt).
2. Mortgages you (or your spouse if married
filing a joint return) took out after October
13, 1987, to buy, build, or improve your
home (called home acquisition debt), but
only if throughout 2017 these mortgages
plus any grandfathered debt totaled $1
million or less ($500,000 or less if married
filing separately).
3. Mortgages you (or your spouse if married
filing a joint return) took out after October
13, 1987, that are home equity debt but
that aren’t home acquisition debt, but only
if throughout 2017 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 (2).
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.

Fully deductible interest. In most cases, you
can deduct all of your home mortgage interest.
How much you can deduct depends on the date
of the mortgage, the amount of the mortgage,
and how you use the mortgage proceeds.
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

Publication 936 (2017)

Figure A. Is My Home Mortgage Interest Fully Deductible?
(Instructions: Include balances of ALL mortgages secured by your main home and second home.)

Start Here:

Do you meet the conditions1 to deduct home
mortgage interest?

You can’t deduct the interest payments as home
mortgage interest. 4

Yes

Were your (or your spouse's if married filing a
joint return) total mortgage balances $100,000 or
less2 ($50,000 or less if married filing separately) at
all times during the year?

Yes
Your home mortgage interest is fully deductible. You
don’t need to read Part II of this publication.

Were all of your home mortgages taken out on or
before October 13, 1987?

Yes

Go to Part II of this publication to determine the
limits on your deductible home mortgage interest.

Were all of your home mortgages taken out after
October 13, 1987, used to buy, build, or improve the
main home secured by that main home mortgage or No
used to buy, build, or improve the second home
secured by that second home mortgage, or both?

Were your (or your spouse's if married filing a
joint return) grandfathered debt plus home
acquisition debt balances $1,000,000 or less3
Yes ($500,000 or less if married filing separately) at all
times during the year?

Yes
Yes
Were your (or your spouse's if married filing a
joint return) mortgage balances $1,000,000 or
less ($500,000 or less if married filing separately)
at all times during the year?

Were your (or your spouse's if married filing a
joint return) home equity debt balances $100,000
or less2 ($50,000 or less if married filing separately)
at all times during the year?

Yes

1 You must itemize deductions on Schedule A (Form 1040). The loan must be a secured debt on a qualified home. See Part I, Home Mortgage Interest.
2 If all mortgages on your main or second home exceed the home’s fair market value, a lower limit may apply. See Home equity debt limit under Home Equity
Debt in Part II.
3 Amounts over the $1,000,000 limit ($500,000 if married filing separately) may qualify as home equity debt if they aren’t more than the total home equity
debt limit. See Part II of this publication for more information about grandfathered debt, home acquisition debt, and home equity debt.
4

See Table 2 in Part II of this publication for where to deduct other types of interest payments.

Secured Debt
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
Publication 936 (2017)

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 can't
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.

cause 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 isn’t secured by your home if it once
was, but is no longer secured by your home.
Wraparound mortgage. This isn’t a secured debt unless it is recorded or otherwise
perfected under state law.

Debt not secured by home. A debt isn’t secured by your home if it is secured solely bePage 3

Example. 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 doesn't record or otherwise perfect
the $90,000 mortgage under the state law that
applies. Therefore, the mortgage isn't a secured
debt and John can't deduct any of the interest
he pays on it 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 can revoke your
choice only with the consent of the Internal Revenue Service (IRS).
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, 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.

Qualified Home
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 isn't deductible.
Main home. You can have only one main
home at any one time. This is the home where
you ordinarily live most of the time.
Second home. A second home is a home that
you choose to treat as your second home.
Second home not rented out. If you have
a second home that you don’t hold out for rent
or resale to others at any time during the year,
you can treat it as a qualified home. You don't
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 don't use the home long enough, it is
considered rental property and not a second
Page 4

home. For information on residential rental
property, see Pub. 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 situations.
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 it.
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 isn't. 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 II.
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 of the following conditions apply.
The rented part of your home is used by
the tenant primarily for residential living.
The rented part of your home isn't a
self-contained residential unit having separate sleeping, cooking, and toilet facilities.
You don't 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
Pub. 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 construction begins.
Home destroyed. 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 publication.
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.
Time-sharing arrangements. 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.
Married taxpayers. If you're married and file a
joint return, your qualified home(s) can be
owned either jointly or by only one spouse.
Separate returns. If you're 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.

Special Situations
This section describes certain items that can be
included as home mortgage interest and others
that can't. 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 wasn't for a
specific service performed in connection with
your mortgage loan.
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
isn't 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.
Example. 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
Publication 936 (2017)

mortgage interest deduction is $1,270 ($1,220
+ $50).
Prepaid interest. 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 Pub. 530 for more information on the mortgage interest credit.
Ministers' and military housing allowance.
If you're a minister or a member of the uniformed services and receive a housing allowance that isn't taxable, you can still deduct your
home mortgage interest.
Hardest Hit Fund and Emergency Homeowners' Loan Programs. You can use a special method to compute your deduction for
mortgage interest and real estate taxes on your
main home if you meet the following two conditions.
1. You received assistance under:
a. A State Housing Finance Agency
(State HFA) Hardest Hit Fund program in which program payments
could be used to pay mortgage interest, or
b. An Emergency Homeowners' Loan
Program administered by the Department of Housing and Urban Development (HUD) or a state.
2. You meet the rules to deduct all of the
mortgage interest on your loan and all of
the real estate taxes on your main home.
If you meet these conditions, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the
State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form
1098-MA, Mortgage Assistance Payments), but
not more than the sum of the amounts shown
on Form 1098, Mortgage Interest Statement, in
box 1 (mortgage interest received from
payer(s)/borrower(s)) and box 11 (real property
taxes). However, you're not required to use this
special method to compute your deduction for
mortgage interest and real estate taxes on your
main home.
Mortgage assistance payments under section 235 of the National Housing Act. If you
qualify for mortgage assistance payments for
lower-income families under section 235 of the

Publication 936 (2017)

National Housing Act, part or all of the interest
on your mortgage may be paid for you. You
can't deduct the interest that is paid for you.

mortgage loan generally is subject to the limit
on Home Equity Debt discussed in Part II.

No other effect on taxes. Don’t include
these mortgage assistance payments in your
income. Also, don't use these payments to reduce other deductions, such as real estate
taxes.

Rental payments. 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 can't deduct these payments as home mortgage interest.

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 Pub. 504,
Divorced or Separated Individuals.

Mortgage proceeds invested in tax-exempt
securities. You can't 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 publication.

Redeemable ground rents. In some states
(such as Maryland), you can 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're 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 are true.
Your lease, including renewal periods, is
for more than 15 years.
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 entitled.

Refunds of interest. If you receive a refund of
interest in the same tax 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 Form
1040, line 21.
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 4. For information
about Form 1098, see Form 1098, Mortgage Interest Statement, later.
For more information on how to treat refunds
of interest deducted in earlier years, see Recoveries in Pub. 525, Taxable and Nontaxable Income.

Payments made to end the lease and to buy
the lessor's entire interest in the land aren't deductible as mortgage interest.
Nonredeemable ground rents. Payments
on a nonredeemable ground rent aren't mortgage interest. You can deduct them as rent if
they are a business expense or if they are for
rental property.
Reverse mortgages. A reverse mortgage is a
loan where the lender pays you (in a lump sum,
a monthly advance, a line of credit, or a combination of all three) while you continue to live in
your home. With a reverse mortgage, you retain
title to your home. Depending on the plan, your
reverse mortgage becomes due with interest
when you move, sell your home, reach the end
of a pre-selected loan period, or die. Because
reverse mortgages are considered loan advances and not income, the amount you receive
isn't taxable. Any interest (including original issue discount) accrued on a reverse mortgage
isn't deductible until you actually pay it, which is
usually when you pay off the loan in full. Your
deduction may be limited because a reverse

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 if
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.
SBA disaster home loans. Interest paid on
disaster home loans from the Small Business
Administration (SBA) is deductible as mortgage
interest if the requirements discussed earlier
under Home Mortgage Interest are met.

Points
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.

Page 5

Figure B. Are My Points Fully Deductible This Year?
Start Here:

Is the loan secured by your main home?

Yes
Is the payment of points an established
business practice in your area?

Yes
Were the points paid more than the
amount generally charged in your area?

Yes

No
Do you use the cash method of
accounting?

Yes
Were the points paid in place of
amounts that ordinarily are separately
stated on the settlement sheet?

Yes

No
Were the funds you provided (other than
those you borrowed from your lender or
mortgage broker), plus any points the
seller paid, at least as much as the points
charged?*

Yes
Yes

Did you take out the loan to improve your
main home?
No
Did you take out the loan to buy or build
your main home?

Yes
Were the points computed as a
percentage of the principal amount of the
mortgage?

Yes
Is the amount paid clearly shown as
points on the settlement statement?

Yes
You can fully deduct the points this year
on Schedule A (Form 1040).

You cannot fully deduct the points this
year. See the discussion on Points.

* The funds you provided are not required 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.

Page 6

Publication 936 (2017)

A borrower is treated as paying any points
that a home seller pays for the borrower's mortgage. See Points paid by the seller, later.

General Rule
You generally can't deduct the full amount of
points in the year paid. Because they are prepaid interest, you generally deduct them ratably
over the life (term) of the mortgage. See Deduction Allowed Ratably, next.
For exceptions to the general rule, see Deduction Allowed in Year Paid, later.

Deduction Allowed Ratably
If you don't meet the tests listed under Deduction Allowed in Year Paid, later, the loan isn't a
home improvement loan, or you choose not to
deduct your points in full in the year paid, you
can deduct the points ratably (equally) over the
life of the loan if you meet all the following tests.
1. 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.
2. Your loan is secured by a home. (The
home doesn't need to be your main
home.)
3. Your loan period isn't more than 30 years.
4. If your loan period is more than 10 years,
the terms of your loan are the same as
other loans offered in your area for the
same or longer period.
5. Either your loan amount is $250,000 or
less, or the number of points isn't more
than:
a. 4, if your loan period is 15 years or
less, or
b. 6, if your loan period is more than 15
years.
Example. You use the cash method of accounting. In 2017, you took out a $100,000 loan
payable over 20 years. The terms of the loan
are the same as for other 20-year loans offered
in your area. You paid $4,800 in points. You
made 3 monthly payments on the loan in 2017.
You can deduct $60 [($4,800 ÷ 240 months) x 3
payments] in 2017. In 2018, if you make all
twelve payments, you will be able to deduct
$240 ($20 x 12).

Deduction Allowed in Year Paid
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.)
1. Your loan is secured by your main home.
(Your main home is the one you ordinarily
live in most of the time.)
2. Paying points is an established business
practice in the area where the loan was
made.
3. The points paid weren't more than the
points generally charged in that area.
Publication 936 (2017)

4. 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.
5. The points weren't 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 taxes.
6. 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 aren't required 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 can't have borrowed these funds from
your lender or mortgage broker.
7. You use your loan to buy or build your
main home.
8. The points were computed as a percentage of the principal amount of the mortgage.
9. The amount is clearly shown on the settlement statement (such as the 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.
Note. 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 the
loan.
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)
are met.
Second home. You can't fully deduct
in the year paid points you pay on
CAUTION loans secured by your second home.
You can deduct these points only over the life of
the loan.

Refinancing. Generally, points you pay to refinance a mortgage aren't 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 Deduction Allowed in Year Paid, 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.
Example 1. In 1998, Bill Fields got a mortgage to buy a home. In 2017, 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 aren't 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 2017 and is a cash basis taxpayer.
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 wasn't for the
purchase or improvement of that home. He
can't deduct all of the points in 2017. 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 2017.
The other point ($1,000) was a fee for services
and isn't deductible.
Example 2. 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 2017. 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 2017.
The total amount Bill deducts in 2017 is $550
($500 + $50).

Special Situations
This section describes certain special situations
that may affect your deduction of points.
Original issue discount. If you don't qualify to
either deduct the points in the year paid or deduct them ratably over the life of the loan, or if
you choose not to use either of these methods,
the points reduce the issue price of the loan.
This reduction results in original issue discount,
which is discussed in chapter 4 of Pub. 535.
Amounts charged for services. Amounts
charged by the lender for specific services connected to the loan aren't interest. Examples of
these charges are:
Appraisal fees,
Department of Veteran’s Affairs (VA) funding fees,
Mortgage Insurance Premiums,
Notary fees, and
Preparation costs for the mortgage note or
deed of trust.
You can't deduct these amounts as points either in the year paid or over the life of the mortgage.
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 can't deduct these fees as interest. But they are a selling expense that reduces the amount realized
by the seller. See Pub. 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
Page 7

or she had paid them. If all the tests under Deduction Allowed in Year Paid, earlier, are met,
the buyer can deduct the points in the year
paid. If any of those tests aren't met, the buyer
deducts the points over the life of the loan.
If you need information about the basis of
your home, see Pub. 523 or Pub. 530.
Funds provided are less than points. If you
meet all the tests in Deduction Allowed in Year
Paid, 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.
Example 1. 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.
Example 2. 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.
Excess points. If you meet all the tests in Deduction Allowed in Year Paid, 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
can't 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.
Example. Dan paid $3,000 in points in
2006 that he had to spread out over the 15-year
life of the mortgage. He deducts $200 points
per year. Through 2017, Dan has deducted
$2,200 of the points.
Dan prepaid his mortgage in full in 2017. He
can deduct the remaining $800 of points in
2017.
Limits on deduction. You can't fully deduct
points paid on a mortgage that exceeds the limits discussed in Part II. See the Table 1 Instructions for line 10.
Form 1098. The mortgage interest statement
you receive should show not only the total interest paid during the year, but also your deducti-

Page 8

ble points paid during the year. See Form 1098,
Mortgage Interest Statement, later.

Form 1098, 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 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.
The statement for each year should be sent
to you 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, and 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 shouldn't
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 2017 that accrued in full by January 15, 2018, this prepaid interest may be included in box 1 of Form 1098. However, you
can't deduct the prepaid amount for January
2018 in 2017. (See Prepaid interest, earlier.)
You will have to figure the interest that accrued
for 2018 and subtract it from the amount in
box 1. You will include the interest for January
2018 with other interest you pay for 2018.
Refunded interest. 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 4. See Refunds of interest, earlier.

How To Report
Deduct the home mortgage interest and points
reported to you on Form 1098 on Schedule A
(Form 1040), line 10. 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 to your paper return explaining the difference and print “See attached” next to line 10.
Deduct home mortgage interest that wasn't
reported to you on Form 1098 on Schedule A
(Form 1040), line 11. If you paid home mortgage interest to the person from whom you
bought your home, show that person's name,
address, and taxpayer identification number
(TIN) on the dotted lines next to line 11. The
seller must give you this number and you must
give the seller your TIN. 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 failure. The TIN can be either a social security number, an individual taxpayer identification number (issued by the Internal Revenue Service), or an employer
identification number.
If you can take a deduction for points that
weren’t reported to you on Form 1098, deduct
those points on Schedule A (Form 1040),
line 12.
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 Schedule A (Form 1040),
line 11, and print “See attached” next to the line.
Similarly, if you're 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 Schedule A (Form
1040), line 10. 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
Corporations
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.
1. Has only one class of stock outstanding,
2. Has no stockholders other than those who
own the stock that can live in a house,
apartment, or house trailer owned or
leased by the corporation,
3. Has no stockholders who can receive any
distribution out of capital other than on a
liquidation of the corporation, and
4. Meets at least one of the following requirements.
Publication 936 (2017)

a. Receives at least 80% of its gross income for the year in which the mortgage interest is paid or incurred from
tenant-stockholders. For this purpose,
gross income is all income received
during the entire year, including
amounts received before the corporation changed to cooperative ownership.
b. At all times during the year, at least
80% of the total square footage of the
corporation's property is used or available for use by the tenant-stockholders for residential or residential-related use.
c. At least 90% of the corporation's expenditures paid or incurred during the
year are for the acquisition, construction, management, maintenance, or
care of corporate property for the benefit of the tenant-stockholders.
Stock used to secure debt. In some cases,
you can't 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 tenantstockholder 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 4 of Pub. 535 for details on these rules.
Figuring deductible home mortgage interest. Generally, if you're 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 the
land.
Figure your share of this interest by multiplying the total by the following fraction.
Your shares of stock in the
cooperative
The total shares of stock
in the cooperative

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.
Form 1098. 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.

Publication 936 (2017)

Part II. Limits on Home
Mortgage Interest
Deduction
This part of the publication discusses the limits
on deductible home mortgage interest. These
limits apply to your home mortgage interest expense if you have a home mortgage that
doesn't fit into any of the three categories listed
at the beginning of Part I under Fully deductible
interest.
Your home mortgage interest deduction is
limited to the interest on the part of your home
mortgage debt that isn't more than your qualified loan limit. This is the part of your home
mortgage debt that is grandfathered debt or that
isn't more than the limits for home acquisition
debt and home equity debt. Table 1 can help
you figure your qualified loan limit and your deductible home mortgage interest.

Home Acquisition Debt
Home acquisition debt is a mortgage you took
out after October 13, 1987, to buy, build, or substantially improve a qualified home (your main
or second home). It also must be secured by
that home.
If the amount of your mortgage is more than
the cost of the home plus the cost of any substantial improvements, only the debt that isn't
more than the cost of the home plus improvements qualifies as home acquisition debt. The
additional debt may qualify as home equity debt
(discussed later).
Home acquisition debt limit. The total
amount you (or your spouse if married filing a
joint return) can treat as home acquisition debt
at any time on your main home and second
home can't be more than $1 million ($500,000 if
married filing separately). This limit is reduced
(but not below zero) by the amount of your
grandfathered debt (discussed later). Debt over
this limit may qualify as home equity debt (also
discussed later).
Refinanced home acquisition debt. Any secured debt you use to refinance home acquisition debt is treated as home acquisition debt.
However, the new debt will qualify as home acquisition debt only up to the amount of the balance of the old mortgage principal just before
the refinancing. Any additional debt not used to
buy, build, or substantially improve a qualified
home isn't home acquisition debt, but may qualify as home equity debt (discussed later).

ever, if the property later becomes a qualified
home, the debt may qualify after that time.
Mortgage treated as used to buy, build, or
improve home. A mortgage secured by a
qualified home may be treated as home acquisition debt, even if you don't actually use the proceeds to buy, build, or substantially improve the
home. This applies in the following situations.
1. You buy your home within 90 days before
or after the date you take out the mortgage. The home acquisition debt is limited
to the home's cost, plus the cost of any
substantial improvements within the limit
described below in (2) or (3). (See Example 1 later.)
2. You build or improve your home and take
out the mortgage before the work is completed. The home acquisition debt is limited to the amount of the expenses incurred within 24 months before the date of
the mortgage.
3. You build or improve your home and take
out the mortgage within 90 days after the
work is completed. The home acquisition
debt is limited to the amount of the expenses incurred within the period beginning
24 months before the work is completed
and ending on the date of the mortgage.
(See Example 2 later.)
Example 1. You bought your main home on
June 3 for $175,000. You paid for the home with
cash you got from the sale of your old home. On
July 15, you took out a mortgage of $150,000
secured by your main home. You used the
$150,000 to invest in stocks. You can treat the
mortgage as taken out to buy your home because you bought the home within 90 days before you took out the mortgage. The entire mortgage qualifies as home acquisition debt
because it wasn't more than the home's cost.
Example 2. On January 31, John began
building a home on the lot that he owned. He
used $45,000 of his personal funds to build the
home. The home was completed on October
31. On November 21, John took out a $36,000
mortgage that was secured by the home. The
mortgage can be treated as used to build the
home because it was taken out within 90 days
after the home was completed. The entire mortgage qualifies as home acquisition debt because it wasn't more than the expenses incurred within the period beginning 24 months
before the home was completed. This is illustrated by Figure C.

Mortgage that qualifies later. A mortgage
that doesn't qualify as home acquisition debt
because it doesn't meet all the requirements
may qualify at a later time. For example, a debt
that you use to buy your home may not qualify
as home acquisition debt because it isn't secured by the home. However, if the debt is later
secured by the home, it may qualify as home
acquisition debt after that time. Similarly, a debt
that you use to buy property may not qualify because the property isn't a qualified home. HowPage 9

Figure C.
John
Starts
Building
Home
䊱

Home
Completed
($45,000 in
Personal
Funds Used)
䊱

$36,000
Mortgage
Taken Out
䊱

Jan. 31

Oct. 31

Nov. 21

䊲
9 Months
(Within 24 Months)

䊲
22 Days
(Within 90 Days)

Date of the mortgage. The date you take
out your mortgage is the day the loan proceeds
are disbursed. This is generally the closing
date. You can treat the day you apply in writing
for your mortgage as the date you take it out.
However, this applies only if you receive the
loan proceeds within a reasonable time (such
as within 30 days) after your application is approved. If a timely application you make is rejected, a reasonable additional time will be allowed to make a new application.
Cost of home or improvements. To determine your cost, include amounts paid to acquire
any interest in a qualified home or to substantially improve the home.
The cost of building or substantially improving a qualified home includes the costs to acquire real property and building materials, fees
for architects and design plans, and required
building permits.
Substantial improvement. An improvement is substantial if it:
Adds to the value of your home,
Prolongs your home's useful life, or
Adapts your home to new uses.
Repairs that maintain your home in good
condition, such as repainting your home, aren't
substantial improvements. However, if you
paint your home as part of a renovation that
substantially improves your qualified home, you
can include the painting costs in the cost of the
improvements.
Acquiring an interest in a home because
of a divorce. If you incur debt to acquire the interest of a spouse or former spouse in a home,
because of a divorce or legal separation, you
can treat that debt as home acquisition debt.
Part of home not a qualified home. To
figure your home acquisition debt, you must divide the cost of your home and improvements
between the part of your home that is a qualified
home and any part that isn't a qualified home.
See Divided use of your home under Qualified
Home in Part I.

Home Equity Debt
If you took out a loan for reasons other than to
buy, build, or substantially improve your home,
it may qualify as home equity debt. In addition,
debt you incurred to buy, build, or substantially
improve your home, to the extent it is more than

Page 10

the home acquisition debt limit (discussed earlier), may qualify as home equity debt.

Grandfathered Debt

Home equity debt is a mortgage you took
out after October 13, 1987, that:
Doesn't qualify as home acquisition debt or
as grandfathered debt, and
Is secured by your qualified home.

If you took out a mortgage on your home before
October 14, 1987, or you refinanced such a
mortgage, it may qualify as grandfathered debt.
To qualify, it must have been secured by your
qualified home on October 13, 1987, and at all
times after that date. How you used the proceeds doesn't matter.

Example. You bought your home for cash
10 years ago. You didn't have a mortgage on
your home until last year, when you took out a
$50,000 loan, secured by your home, to pay for
your daughter's college tuition and your father's
medical bills. This loan is home equity debt.
Home equity debt limit. There is a limit on the
amount of debt that can be treated as home
equity debt. The total home equity debt on your
main home and second home is limited to the
smaller of:
$100,000 ($50,000 if married filing separately), or
The total of each home's fair market value
(FMV) reduced (but not below zero) by the
amount of its home acquisition debt and
grandfathered debt. Determine the FMV
and the outstanding home acquisition and
grandfathered debt for each home on the
date that the last debt was secured by the
home.
Example. You own one home that you
bought in 2003. Its FMV now is $110,000, and
the current balance on your original mortgage
(home acquisition debt) is $95,000. Bank M offers you a home mortgage loan of 125% of the
FMV of the home less any outstanding mortgages or other liens. To consolidate some of
your other debts, you take out a $42,500 home
mortgage loan [(125% × $110,000) − $95,000]
with Bank M.
Your home equity debt is limited to $15,000.
This is the smaller of:
$100,000, the maximum limit, or
$15,000, the amount that the FMV of
$110,000 exceeds the amount of home acquisition debt of $95,000.
Debt higher than limit. Interest on
amounts over the home equity debt limit (such
as the interest on $27,500 [$42,500 − $15,000]
in the preceding example) generally is treated
as personal interest and isn't deductible. But if
the proceeds of the loan were used for investment, business, or other deductible purposes,
the interest may be deductible. If it is, see the
Table 1 Instructions for line 13 for an explanation of how to allocate the excess interest.
Part of home not a qualified home. To
figure the limit on your home equity debt, you
must divide the FMV of your home between the
part that is a qualified home and any part that
isn't a qualified home. See Divided use of your
home under Qualified Home in Part I.
Fair market value (FMV). This is the price
at which the home would change hands between you and a buyer, neither having to sell or
buy, and both having reasonable knowledge of
all relevant facts. Sales of similar homes in your
area, on about the same date your last debt
was secured by the home, may be helpful in figuring the FMV.

Grandfathered debt isn't limited. All of the interest you paid on grandfathered debt is fully
deductible home mortgage interest. However,
the amount of your grandfathered debt reduces
the $1 million limit for home acquisition debt
and the limit based on your home's fair market
value for home equity debt.
Refinanced grandfathered debt. If you refinanced grandfathered debt after October 13,
1987, for an amount that wasn't more than the
mortgage principal left on the debt, then you still
treat it as grandfathered debt. To the extent the
new debt is more than that mortgage principal,
it is treated as home acquisition or home equity
debt, and the mortgage is a mixed-use mortgage (discussed later under Average Mortgage
Balance in the Table 1 Instructions). The debt
must be secured by the qualified home.
You treat grandfathered debt that was refinanced after October 13, 1987, as grandfathered debt only for the term left on the debt that
was refinanced. After that, you treat it as home
acquisition debt or home equity debt, depending on how you used the proceeds.
Exception. If the debt before refinancing
was like a balloon note (the principal on the
debt wasn't amortized over the term of the
debt), then you treat the refinanced debt as
grandfathered debt for the term of the first refinancing. This term can't be more than 30 years.
Example. Chester took out a $200,000 first
mortgage on his home in 1986. The mortgage
was a 5-year balloon note and the entire balance on the note was due in 1991. Chester refinanced the debt in 1991 with a new 30-year
mortgage. The refinanced debt is treated as
grandfathered debt for its entire term (30 years).
Line-of-credit mortgage. If you had a
line-of-credit mortgage on October 13, 1987,
and borrowed additional amounts against it after that date, then the additional amounts are either home acquisition debt or home equity debt
depending on how you used the proceeds. The
balance on the mortgage before you borrowed
the additional amounts is grandfathered debt.
The newly borrowed amounts aren't grandfathered debt because the funds were borrowed after October 13, 1987. See Average Mortgage
Balance in the Table 1 Instructions that follow.

Table 1 Instructions
Unless you're subject to the overall limit on
itemized deductions, you can deduct all of the
interest you paid during the year on mortgages
secured by your main home or second home in
either of the following two situations.
All the mortgages are grandfathered debt.
The total of the mortgage balances for the
entire year is within the limits discussed
Publication 936 (2017)

Table 1. Worksheet To Figure Your Qualified Loan Limit and Deductible
Home Mortgage Interest For the Current Year
Keep for Your Records

See the Table 1 Instructions.
Part I

Qualified Loan Limit

Enter the average balance of all your grandfathered debt. See line 1
instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Enter the average balance of all your home acquisition debt. See line 2
instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Enter $1,000,000 ($500,000 if married filing separately) . . . . . . . . . . . . . . . . . . . . . . . . . .

Enter the larger of the amount on line 1 or the amount on line 3 . . . . . . . . . . . . . . . . . . . .

Add the amounts on lines 1 and 2. Enter the total here . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Enter the smaller of the amount on line 4 or the amount on line 5 . . . . . . . . . . . . . . . . . .

If you have home equity debt, enter the smaller of $100,000 ($50,000 if married filing
separately) or your limited amount. See the line 7 instructions for the limit which may
apply to you. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Add the amounts on lines 6 and 7. Enter the total. This is your qualified loan
limit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part II
9.

Deductible Home Mortgage Interest
Enter the total of the average balances of all mortgages on all qualified homes.
See line 9 instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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
isn't home mortgage interest. See line 13 instructions . . . . . . . . . . . . . . . . . . . . . . . . . .

13.

earlier under Home Acquisition Debt and
Home Equity Debt.
In either of those cases, you don't need Table 1.
Otherwise, you can use Table 1 to determine
your qualified loan limit and deductible home
mortgage interest.
Fill out only one Table 1 for both your

TIP main and second home regardless of
how many mortgages you have.

Home equity debt only. If all of your mortgages are home equity debt, don't fill in lines 1
through 5. Enter zero on line 6 and complete
the rest of Table 1.
Publication 936 (2017)

Average Mortgage Balance
You have to figure the average balance of each
mortgage to determine your qualified loan limit.
You need these amounts to complete lines 1, 2,
and 9 of Table 1. You can use the highest mortgage balances during the year, but you may
benefit most by using the average balances.
The following are methods you can use to figure
your average mortgage balances. However, if a
mortgage has more than one category of debt,
see Mixed-use mortgages, later, in this section.

×.

Average of first and last balance method.
You can use this method if all the following apply.
You didn't borrow any new amounts on the
mortgage during the year. (This doesn't include borrowing the original mortgage
amount.)
You didn't prepay more than 1 month's
principal during the year. (This includes
prepayment by refinancing your home or
by applying proceeds from its sale.)
You had to make level payments at fixed
equal intervals on at least a semi-annual
basis. You treat your payments as level
even if they were adjusted from time to
Page 11

time because of changes in the interest
rate.

To figure your average balance, complete the following worksheet.

Enter the balance as of the first
day of the year that the
mortgage was secured by your
qualified home during the year
(generally January 1) . . . . . . . .

Enter the balance as of the last
day of the year that the
mortgage was secured by your
qualified home during the year
(generally December 31) . . . . .

Add amounts on lines 1 and
2 ..........................

Divide the amount on line 3 by
2. Enter the result . . . . . . . . . . .

Interest paid divided by interest rate
method. You can use this method if at all times
in 2017 the mortgage was secured by your
qualified home and the interest was paid at
least monthly.
Complete the following worksheet to
figure your average balance.

Enter the interest paid in 2017.
Don't include points, mortgage
insurance premiums, or any
interest paid in 2017 that is for a
year after 2017. However, do
include interest that is for 2017
but was paid in an earlier
year . . . . . . . . . . . . . . . . . . . . . . . .

Enter the annual interest rate on
the mortgage. If the interest rate
varied in 2017, use the lowest
rate for the year . . . . . . . . . . . . . .

Divide the amount on line 1 by
the amount on line 2. Enter the
result . . . . . . . . . . . . . . . . . . . . . . .

Example. Mr. Blue had a line of credit secured by his main home all year. He paid interest of $2,500 on this loan. The interest rate on
the loan was 9% (0.09) all year. His average
balance using this method is $27,778, figured
as follows.

Enter the interest paid in 2017.
Don’t include points, mortgage
insurance premiums, or any
interest paid in 2017 that is for
a year after 2017. However,
do include interest that is for
2017 but was paid in an earlier
year . . . . . . . . . . . . . . . . . . . . . . . $2,500
Enter the annual interest rate
on the mortgage. If the interest
rate varied in 2017, use the
lowest rate for the year . . . . . . .

0.09

Divide the amount on line 1 by
the amount on line 2. Enter the
result . . . . . . . . . . . . . . . . . . . . . . $27,778

Statements provided by your lender. If you
receive monthly statements showing the closing
balance or the average balance for the month,
you can use either to figure your average balance for the year. You can treat the balance as
zero for any month the mortgage wasn't secured by your qualified home.
For each mortgage, figure your average balance by adding your monthly closing or average
balances and dividing that total by the number
of months the home secured by that mortgage
was a qualified home during the year.
If your lender can give you your average balance for the year, you can use that amount.
Example. Ms. Brown had a home equity
loan secured by her main home all year. She received monthly statements showing her average balance for each month. She can figure her
average balance for the year by adding her
monthly average balances and dividing the total
by 12.
Mixed-use mortgages. A mixed-use mortgage is a loan that consists of more than one of
the three categories of debt (grandfathered
debt, home acquisition debt, and home equity
debt). For example, a mortgage you took out
during the year is a mixed-use mortgage if you
used its proceeds partly to refinance a mortgage that you took out in an earlier year to buy
your home (home acquisition debt) and partly to
buy a car (home equity debt).
Complete lines 1 and 2 of Table 1 by including the separate average balances of any
grandfathered debt and home acquisition debt
in your mixed-use mortgage. Don’t use the
methods described earlier in this section to figure the average balance of either category. Instead, for each category, use the following
method.
1. Figure the balance of that category of debt
for each month. This is the amount of the
loan proceeds allocated to that category,
reduced by your principal payments on the
mortgage previously applied to that category. Principal payments on a mixed-use
mortgage are applied in full to each category of debt, until its balance is zero, in the
following order:
a. First, any home equity debt,
b. Next, any grandfathered debt, and
c. Finally, any home acquisition debt.

Page 12

2. Add together the monthly balances figured
in (1).
3. Divide the result in (2) by 12.
Complete line 9 of Table 1 by including the
average balance of the entire mixed-use mortgage, figured under one of the methods described earlier in this section.
Example 1. On October 1, 1987, Sharon
took out a $1,400,000 mortgage to buy her
main home (grandfathered debt). On March 2,
2016, when the home had a fair market value of
$1,700,000 and she owed $1,100,000 on the
mortgage, Sharon took out a second mortgage
for $200,000. She used $180,000 of the proceeds to make substantial improvements to her
home (home acquisition debt) and the remaining $20,000 to buy a car (home equity debt).
Under the loan agreement, Sharon must make
principal payments of $1,000 at the end of each
month. During 2016, her principal payments on
the second mortgage totaled $10,000.
To complete Table 1, line 2, Sharon must
figure a separate average balance for the part
of her second mortgage that is home acquisition debt. The January and February balances
were zero. The March through December balances were all $180,000, because none of her
principal payments are applied to the home acquisition debt. (They are all applied to the home
equity debt, reducing it to $10,000 [$20,000 −
$10,000].) The monthly balances of the home
acquisition debt total $1,800,000 ($180,000 ×
10). Therefore, the average balance of the
home acquisition debt for 2016 was $150,000
($1,800,000 ÷ 12).
Example 2. The facts are the same as in
Example 1. In 2017, Sharon's January through
October principal payments on her second
mortgage are applied to the home equity debt,
reducing it to zero. The balance of the home acquisition debt remains $180,000 for each of
those months. Because her November and December principal payments are applied to the
home acquisition debt, the November balance
is $179,000 ($180,000 − $1,000) and the December balance is $178,000 ($180,000 −
$2,000). The monthly balances total $2,157,000
[($180,000 × 10) + $179,000 + $178,000].
Therefore, the average balance of the home acquisition debt for 2017 is $179,750 ($2,157,000
÷ 12).

Line 1
Figure the average balance for the current year
of each mortgage you had on all qualified
homes on October 13, 1987 (grandfathered
debt). Add the results together and enter the total on line 1. Include the average balance for the
current year for any grandfathered debt part of
a mixed-use mortgage.

Line 2
Figure the average balance for the current year
of each mortgage you took out on all qualified
homes after October 13, 1987, to buy, build, or
substantially improve the home (home acquisition debt). Add the results together and enter
the total on line 2. Include the average balance
Publication 936 (2017)

for the current year for any home acquisition
debt part of a mixed-use mortgage.

Line 7
If you have home equity debt, complete line 7.
The amount on line 7 can't be more than the
smaller of:
1. $100,000 ($50,000 if married filing separately), or
2. The total of each home's fair market value
(FMV) reduced (but not below zero) by the
amount of its home acquisition debt and
grandfathered debt. Determine the FMV
and the outstanding home acquisition and
grandfathered debt for each home on the
date that the last debt was secured by the
home.
See Home equity debt limit under Home
Equity Debt, earlier, for more information about
fair market value.

Line 9
Figure the average balance for the current year
of each outstanding home mortgage. Add the

Publication 936 (2017)

average balances together and enter the total
on line 9. See Average Mortgage Balance, earlier.
Note. When figuring the average balance of
a mixed-use mortgage, for line 9, determine the
average balance of the entire mortgage.

Line 10
If you make payments to a financial institution,
or to a person whose business is making loans,
you should get Form 1098 or a similar statement from the lender. This form will show the
amount of interest to enter on line 10. Also include on this line any other interest payments
made on debts secured by a qualified home for
which you didn't receive a Form 1098. Don't include points on this line.

whichever applies. This amount is fully deductible.
3. Subtract the result in item (2) from the
amount in item (1). This amount isn't deductible as home mortgage interest. However, if you used any of the loan proceeds
for business or investment activities, see
the instructions for line 13, next.

Line 13
You can't deduct the amount of interest on
line 13 as home mortgage interest. If you didn't
use any of the proceeds of any mortgage included on line 9 of the worksheet for business,
investment, or other deductible activities, then
all the interest on line 13 is personal interest.
Personal interest isn't deductible.

Claiming your deductible points. Figure
your deductible points as follows.
1. Figure your deductible points for the current year using the rules explained under
Points in Part I.
2. Multiply the amount in item (1) by the decimal amount on line 11. Enter the result on
Schedule A (Form 1040), line 10 or 12,

Page 13

Table 2. Where To Deduct Your Interest Expense
IF you have ...

THEN deduct it on ...

AND for more information go to ...

deductible student loan interest

Form 1040, line 33, or Form 1040A,
line 18

Pub. 970, Tax Benefits for Education.

deductible home mortgage interest
and points reported on Form 1098

Schedule A (Form 1040), line 10

this publication (936).

deductible home mortgage interest
not reported on Form 1098

Schedule A (Form 1040), line 11

this publication (936).

deductible points not reported on
Form 1098

Schedule A (Form 1040), line 12

this publication (936).

deductible investment interest (other
than incurred to produce rents or
royalties)

Schedule A (Form 1040), line 14

Pub. 550, Investment Income and
Expenses.

deductible business interest
(non-farm)

Schedule C or C-EZ (Form 1040)

Pub. 535.

deductible farm business interest

Schedule F (Form 1040)

Pubs. 225, Farmer's Tax Guide, and
535.

deductible interest incurred to
produce rents or royalties

Schedule E (Form 1040)

Pubs. 527 and 535.

personal interest

not deductible.

If you did use all or part of any mortgage
proceeds for business, investment, or other deductible activities, the part of the interest on
line 13 that is allocable to those activities can
be deducted as business, investment, or other
deductible expense, subject to any limits that
apply. Table 2 shows where to deduct that interest. See Allocation of Interest in chapter 4 of
Pub. 535 for an explanation of how to determine
the use of loan proceeds.
The following two rules describe how to allocate the interest on line 13 to a business or investment activity.
If you used all of the proceeds of the mortgages on line 9 for one activity, then all the
interest on line 13 is allocated to that activity. In this case, deduct the interest on the
form or schedule to which it applies.
If you used the proceeds of the mortgages
on line 9 for more than one activity, then
you can allocate the interest on line 13
among the activities in any manner you select (up to the total amount of interest otherwise allocable to each activity, explained
next).
You figure the total amount of interest otherwise allocable to each activity by multiplying the
amount on line 10 by the following fraction.
Amount on line 9
allocated to that activity
Total amount on line 9

Example. Don had two mortgages (A and
B) on his main home during the entire year.
Mortgage A had an average balance of
$90,000, and mortgage B had an average balance of $110,000.
Page 14

Don determines that the proceeds of mortgage A are allocable to personal expenses for
the entire year. The proceeds of mortgage B
are allocable to his business for the entire year.
Don paid $14,000 of interest on mortgage A
and $16,000 of interest on mortgage B. He figures the amount of home mortgage interest he
can deduct by using Table 1. Since both mortgages are home equity debt, Don determines
that $15,000 of the interest can be deducted as
home mortgage interest.
The interest Don can allocate to his business is the smaller of:
1. The amount on Table 1, line 13 of the
worksheet ($15,000), or
2. The total amount of interest allocable to
the business ($16,500), figured by multiplying the amount on line 10 (the $30,000
total interest paid) by the following fraction.
$110,000 (the average balance
of the mortgage allocated
to the business)
$200,000 (the total average
balance of all mortgages)

Because $15,000 is the smaller of items (1)
and (2), that is the amount of interest Don can
allocate to his business. He deducts this
amount on his Schedule C (Form 1040).

How To Get Tax Help
If you have questions about a tax issue, need
help preparing your tax return, or want to download free publications, forms, or instructions, go

to IRS.gov and find resources that can help you
right away.
Preparing and filing your tax return. Find
free options to prepare and file your return on
IRS.gov or in your local community if you qualify.
The Volunteer Income Tax Assistance
(VITA) program offers free tax help to people
who generally make $54,000 or less, persons
with disabilities, the elderly, and limited-English-speaking taxpayers who need help preparing their own tax returns. The Tax Counseling
for the Elderly (TCE) program offers free tax
help for all taxpayers, particularly those who are
60 years of age and older. TCE volunteers specialize in answering questions about pensions
and retirement-related issues unique to seniors.
You can go to IRS.gov and click on the Filing tab to see your options for preparing and filing your return which include the following.
Free File. Go to IRS.gov/FreeFile. See if
you qualify to use brand-name software to
prepare and e-file your federal tax return
for free.
VITA. Go to IRS.gov/VITA, download the
free IRS2Go app, or call 1-800-906-9887
to find the nearest VITA location for free
tax preparation.
TCE. Go to IRS.gov/TCE, download the
free IRS2Go app, or call 1-888-227-7669
to find the nearest TCE location for free tax
preparation.
Getting answers to your tax law
questions. On IRS.gov get answers to
your tax questions anytime, anywhere.
Go to IRS.gov/Help or IRS.gov/LetUsHelp
pages for a variety of tools that will help

Publication 936 (2017)

you get answers to some of the most common tax questions.
Go to IRS.gov/ITA for the Interactive Tax
Assistant, a tool that will ask you questions
on a number of tax law topics and provide
answers. You can print the entire interview
and the final response for your records.
Go to IRS.gov/Pub17 to get Pub. 17, Your
Federal Income Tax for Individuals, which
features details on tax-saving opportunities, 2017 tax changes, and thousands of
interactive links to help you find answers to
your questions. View it online in HTML or
as a PDF or, better yet, download it to your
mobile device to enjoy eBook features.
You may also be able to access tax law information in your electronic filing software.
Getting tax forms and publications. Go to
IRS.gov/Forms to view, download, or print all of
the forms and publications you may need. You
can also download and view popular tax publications and instructions (including the 1040 instructions) on mobile devices as an eBook at no
charge. Or, you can go to IRS.gov/OrderForms
to place an order and have forms mailed to you
within 10 business days.
Using direct deposit. The fastest way to receive a tax refund is to combine direct deposit
and IRS e-file. Direct deposit securely and electronically transfers your refund directly into your
financial account. Eight in 10 taxpayers use direct deposit to receive their refund. IRS issues
more than 90% of refunds in less than 21 days.
Delayed refund for returns claiming certain
credits. Due to changes in the law, the IRS
can’t issue refunds before February 15, 2017,
for returns that claim the earned income credit
(EIC) or the additional child tax credit (ACTC).
This applies to the entire refund, not just the
portion associated with these credits.
Getting a transcript or copy of a return. The
quickest way to get a copy of your tax transcript
is to go to IRS.gov/Transcripts. Click on either
"Get Transcript Online" or "Get Transcript by
Mail" to order a copy of your transcript. If you
prefer, you can:
Order your transcript by calling
1-800-908-9946.
Mail Form 4506-T or Form 4506T-EZ (both
available on IRS.gov).
Using online tools to help prepare your return. Go to IRS.gov/Tools for the following.
The Earned Income Tax Credit Assistant
(IRS.gov/EIC) determines if you're eligible
for the EIC.
The Online EIN Application (IRS.gov/EIN)
helps you get an employer identification
number.
The IRS Withholding Calculator (IRS.gov/
W4app) estimates the amount you should
have withheld from your paycheck for federal income tax purposes.
The First Time Homebuyer Credit Account
Look-up (IRS.gov/HomeBuyer) tool provides information on your repayments and
account balance.
The Sales Tax Deduction Calculator
(IRS.gov/SalesTax) figures the amount you
Publication 936 (2017)

can claim if you itemize deductions on
Schedule A (Form 1040), choose not to
claim state and local income taxes, and
you didn’t save your receipts showing the
sales tax you paid.
Resolving tax-related identity theft issues.
The IRS doesn’t initiate contact with taxpayers by email or telephone to request
personal or financial information. This includes any type of electronic communication, such as text messages and social media channels.
Go to IRS.gov/IDProtection for information
and videos.
If your SSN has been lost or stolen or you
suspect you're a victim of tax-related identity theft, visit IRS.gov/ID to learn what
steps you should take.
Checking on the status of your refund.
Go to IRS.gov/Refunds.
Due to changes in the law, the IRS can’t issue refunds before mid-February 2018, for
returns that properly claimed the EIC or the
ACTC. This applies to the entire refund,
not just the portion associated with these
credits.
Download the official IRS2Go app to your
mobile device to check your refund status.
Call the automated refund hotline at
1-800-829-1954.
Making a tax payment. The IRS uses the latest encryption technology to ensure your electronic payments are safe and secure. You can
make electronic payments online, by phone,
and from a mobile device using the IRS2Go
app. Paying electronically is quick, easy, and
faster than mailing in a check or money order.
Go to IRS.gov/Payments to make a payment
using any of the following options.
IRS Direct Pay: Pay your individual tax bill
or estimated tax payment directly from
your checking or savings account at no
cost to you.
Debit or credit card: Choose an approved payment processor to pay online,
by phone, and by mobile device.
Electronic Funds Withdrawal: Offered
only when filing your federal taxes using
tax preparation software or through a tax
professional.
Electronic Federal Tax Payment System: Best option for businesses. Enrollment is required.
Check or money order: Mail your payment to the address listed on the notice or
instructions.
Cash: If cash is your only option, you may
be able to pay your taxes at a participating
retail store.
What if I can’t pay now? Go to IRS.gov/
Payments for more information about your options.
Apply for an online payment agreement
(IRS.gov/OPA) to meet your tax obligation
in monthly installments if you can’t pay
your taxes in full today. Once you complete
the online process, you will receive immediate notification of whether your agreement has been approved.

Use the Offer in Compromise Pre-Qualifier
(IRS.gov/OIC) to see if you can settle your
tax debt for less than the full amount you
owe.
Checking the status of an amended return.
Go to IRS.gov and click on Where’s My
Amended Return? (IRS.gov/WMAR) under the
“Tools” bar to track the status of Form 1040X
amended returns. Please note that it can take
up to 3 weeks from the date you mailed your
amended return for it show up in our system
and processing it can take up to 16 weeks.
Understanding an IRS notice or letter. Go to
IRS.gov/Notices to find additional information
about responding to an IRS notice or letter.
Contacting your local IRS office. Keep in
mind, many questions can be resolved on
IRS.gov without visiting an IRS Tax Assistance
Center (TAC). Go to IRS.gov/LetUsHelp for the
topics people ask about most. If you still need
help, IRS TACs provide tax help when a tax issue can’t be handled online or by phone. All
TACs now provide service by appointment so
you’ll know in advance that you can get the
service you need without waiting. Before you
visit, go to IRS.gov/TACLocator to find the nearest TAC, check hours, available services, and
appointment options. Or, on the IRS2Go app,
under the Stay Connected tab, choose the Contact Us option and click on “Local Offices.”
Watching IRS videos. The IRS Video portal
(IRSvideos.gov) contains video and audio presentations for individuals, small businesses,
and tax professionals.
Getting tax information in other languages.
For taxpayers whose native language isn’t English, we have the following resources available.
Taxpayers can find information on IRS.gov in
the following languages.
Spanish (IRS.gov/Spanish).
Chinese (IRS.gov/Chinese).
Vietnamese (IRS.gov/Vietnamese).
Korean (IRS.gov/Korean).
Russian (IRS.gov/Russian).
The IRS TACs provide over-the-phone interpreter service in over 170 languages, and the
service is available free to taxpayers.

The Taxpayer Advocate
Service Is Here To Help You

What is the Taxpayer Advocate
Service?

The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that
helps taxpayers and protects taxpayer rights.
Our job is to ensure that every taxpayer is treated fairly and that you know and understand
your rights under the Taxpayer Bill of Rights.

What Can the Taxpayer Advocate
Service Do For You?
We can help you resolve problems that you
can’t resolve with the IRS. And our service is
free. If you qualify for our assistance, you will be
assigned to one advocate who will work with
Page 15

you throughout the process and will do everything possible to resolve your issue. TAS can
help you if:
Your problem is causing financial difficulty
for you, your family, or your business,
You face (or your business is facing) an
immediate threat of adverse action, or
You’ve tried repeatedly to contact the IRS
but no one has responded, or the IRS
hasn’t responded by the date promised.

How Can You Reach Us?
We have offices in every state, the District of
Columbia, and Puerto Rico. Your local advocate’s number is in your local directory and at
TaxpayerAdvocate.IRS.gov. You can also call
us at 1-877-777-4778.

Index

How Can You Learn About Your
Taxpayer Rights?

these broad issues, please report it to us at
IRS.gov/SAMS.

The Taxpayer Bill of Rights describes 10 basic
rights that all taxpayers have when dealing with
the
IRS.
Our
Tax
Toolkit
at
TaxpayerAdvocate.IRS.gov can help you understand what these rights mean to you and
how they apply. These are your rights. Know
them. Use them.

Low Income Taxpayer
Clinics

How Else Does the Taxpayer
Advocate Service Help Taxpayers?
TAS works to resolve large-scale problems that
affect many taxpayers. If you know of one of

To help us develop a more useful index, please let us know if you have ideas for index entries.
See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.

Acquisition debt 2, 9, 10
Alimony 5
Amortization:
Points 7
Appraisal fees 7
Armed forces:
Housing allowance 5
Assistance (See Tax help)
Average mortgage balance 11

Divorced taxpayers 5, 10

Emergency Homeowners' Loan
Program 5
Equity debt 2, 10
Equity debt only (Table 1) 11

Fair market value (FMV) 10
Fees:
Appraisal 7
B
Notaries 7
Borrowers:
Points (See Points)
More than one 8
Seller-paid points, treatment by Figures (See Tables and figures)
Form 1040, Schedule A 8, 14
buyer 7
Form 1040, Schedule C or
Business:
C-EZ 14
Average mortgage balance, total
amount of interest otherwise Form 1040, Schedule E 14
allowable to each activity 13 Form 1040, Schedule F 14
Form 1098 8
Mortgage proceeds used for 8
Form 8396 5

Clergy:
Ministers' and military housing
allowance 5
Cooperative housing 4, 5, 8, 9
Cost of home or
improvements 10
Credits 5

Grandfathered debt 2, 10
Ground rents 5

Hardest Hit Fund Program 5
Home 2
Acquisition debt 2, 9
Construction 4
D
Cost of 10
Date of mortgage 10
Destroyed 4
Debt:
Divided use 4, 10
Choice to treat as not secured by
Equity debt 2, 10
home 4
Equity debt only (Table 1) 11
Grandfathered 2, 10
Fair market value 10
Home acquisition 2, 9
Grandfathered debt 2, 10
Home equity 2, 10
Improvement loan, points 7
Home equity only (Table 1) 11
Main 4
Not secured by home 3
Office in 4
Secured 3
Qualified 4
Deductions 2, 5
Renting out part of 4
Home office 4
Sale of 4
Points 7, 13
Second 4
Deed preparation costs 7
Page 16

Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level
and need to resolve tax problems such as audits, appeals, and tax collection disputes. Some
clinics can provide information about taxpayer
rights and responsibilities in different languages
for individuals who speak English as a second
language. To find a clinic near you, visit
TaxpayerAdvocate.IRS.gov/LITCmap or see
IRS Pub. 4134, Low Income Taxpayer Clinic
List.

Time-sharing arrangements 4
Housing allowance:
Ministers and military 5

Identity theft 15
Improvements:
Cost of 10
Home acquisition debt 9
Points 7
Substantial 10
Interest 2
(See also Mortgage interest)
Interest rate method 12
Refunded 5, 8
Where to deduct 14
Investments:
Average mortgage balance and
total amount of interest
allowable 13
Mortgage proceeds used for 5,
8

Joint returns 4

Lender mortgage statements 12
Limits:
Cooperative housing, mortgage
interest deduction 9
Deductibility of points 8
Home acquisition debt 9
Home equity debt 10
Home mortgage interest
deduction 9
Qualified loan limit 11
Line 10 8
Line-of-credit mortgage 10
Loans 8, 9
(See also Mortgages)
Home improvement, points 7
Qualified loan limit 11

Married taxpayers 4
Military housing allowance 5
Ministers' housing allowance 5
Missing children, photographs
of 1
Mixed-use mortgages 12
Mortgage interest 2
Cooperative housing 9
Credit 5
Fully deductible interest 2
Home mortgage interest 2, 5
How to report 8
Late payment charges 4
Limits on deduction 9
Ministers' and military housing
allowance 5
Prepaid interest 5, 8
Prepayment penalty 4
Refunds 5, 8
Sale of home 4
Special situations 4
Statement 8
Where to deduct 14
Worksheet to figure (Table 1) 11
Mortgage Interest Statement 8
Mortgages:
Assistance payments (under
sec. 235 of National Housing
Act) 5
Average balance 11
Date of 10
Ending early 8
Late qualifying 9
Line-of-credit 10
Mixed-use 12
Preparation costs for note or
deed of trust 7
Proceeds invested in tax-exempt
securities 5
Proceeds used for business 8
Proceeds used for investment 8
Qualified loan limit 11
Refinanced 7, 9, 10
Reverse 5
Statements provided by
lender 12
To buy, build, or improve 9
Wraparound 3

Main home 4
Publication 936 (2017)

Nonredeemable ground rents 5
Notary fees 7

Office in home 4

Penalties:
Mortgage prepayment 4
Points 5–8
Claiming deductible 13
Exception to general rule 7
Excess 8
Funds provided less than 8
General rule 7
Home improvement loans 7
Seller paid 7
Prepaid interest 5, 8
Prepayment penalties 4
Publications (See Tax help)

Publication 936 (2017)

Qualified homes 4
Qualified loan limit:
Average mortgage balance 11
Worksheet to figure (Table 1) 11

Redeemable ground rents 5
Refinancing 7
Grandfathered debt 10
Home acquisition debt 9
Refunds 5, 8
Rent:
Nonredeemable ground rents 5
Redeemable ground rents 5
Rental payments 5
Renting of home:
Part of 4
Time-sharing arrangements 4
Repairs 10
Reverse Mortgages 5

Sale of home 4
Second home 4, 7
Secured debt 3
Seller-paid points 7
Separated taxpayers 5
Separate returns 4
Share of Interest 9
Special Method 5
Spouses 4
Statements provided by
lender 12
Stock:
Cooperative housing 9

Tables and figures:
Deductible home mortgage
interest:
Fully deductible,
determination of (Figure
A) 2
How to figure (Table 1) 11

Mortgage to buy, build, or
improve home (Figure C) 9
Points (Figure B) 5
Qualified loan limit worksheet
(Table 1) 11
Tax credits 5
Tax-exempt securities:
Mortgage proceeds invested
in 5
Tax help 14
Time-sharing arrangements 4

Valuation:
Fair market value 10

Worksheets:
Deductible home mortgage
interest 11
Qualified loan limit 11
Wraparound mortgages 3

Page 17

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2017 Publication 936 P936

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