2023 Publication 936

Contents

Reminders ................... 1

Introduction .................. 2

Part I. Home Mortgage Interest ...... 2

Secured Debt ............... 3

Qualified Home .............. 4

Special Situations ............4

Points ................... 5

Form 1098, Mortgage Interest

Statement ............... 8

How To Report .............. 8

Special Rule for

Tenant-Stockholders in

Cooperative Housing

Corporations ............. 8

Part II. Limits on Home Mortgage

Interest Deduction ........... 9

Home Acquisition Debt ......... 9

Grandfathered Debt .......... 10

Worksheet To Figure Your

Qualified Loan Limit and

Deductible Home Mortgage

Interest for the Current Year .... 11

How To Get Tax Help ............ 14

Index ..................... 17

Reminders

Mortgage insurance premiums. The item-

ized deduction for mortgage insurance premi-

ums has expired. You can no longer claim the

deduction.

Home equity loan interest. No matter when

the indebtedness was incurred, you can no lon-

ger deduct the interest from a loan secured by

your home to the extent the loan proceeds

weren't used to buy, build, or substantially im-

prove your home.

Home mortgage interest. You can deduct

home mortgage interest on the first $750,000

($375,000 if married filing separately) of indebt-

edness. However, higher limitations ($1 million

($500,000 if married filing separately)) apply if

you are deducting mortgage interest from in-

debtedness incurred before December 16,

2017.

Future developments. For the latest informa-

tion about developments related to Pub. 936,

such as legislation enacted after it was pub-

lished, go to IRS.gov/Pub936.

Photographs of missing children. The IRS is

a proud partner with the National Center for

Missing & Exploited Children® (NCMEC). Pho-

tographs of missing children selected by the

Center may appear in this publication on pages

that would otherwise be blank. You can help

bring these children home by looking at the

photographs and calling 1-800-THE-LOST

(1-800-843-5678) if you recognize a child.

Department

of the

Treasury

Internal

Revenue

Service

Publication 936

Cat. No. 10426G

Home

Mortgage

Interest

Deduction

For use in preparing

2023 Returns

Get forms and other information faster and easier at:

• IRS.gov (English)

• IRS.gov/Spanish (Español)

•

IRS.gov/Chinese (中文)

•

IRS.gov/Korean (한국어)

• IRS.gov/Russian (Pусский)

• IRS.gov/Vietnamese (Tiếng Việt)

Userid: CPM Schema: tipx Leadpct: 100% Pt. size: 8

Draft Ok to Print

AH XSL/XML

Fileid: … tions/p936/2023/a/xml/cycle05/source (Init. & Date) _______

Page 1 of 18 11:38 - 3-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Nov 30, 2023

Introduction

This publication discusses the rules for deduct-

ing home mortgage interest.

Part I contains general information on home

mortgage interest, including points. It also ex-

plains how to report deductible interest on your

tax return.

Part II explains how your deduction for home

mortgage interest may be limited. It contains Ta-

ble 1, which is a worksheet you can use to fig-

ure the limit on your deduction.

Comments and suggestions. We welcome

your comments about this publication and sug-

gestions for future editions.

You can send us comments through

IRS.gov/FormComments. Or, you can write to

the 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 and

suggestions as we revise our tax forms, instruc-

tions, and publications. Don’t send tax ques-

tions, tax returns, or payments to the above ad-

dress.

Getting answers to your tax questions.

If you have a tax question not answered by this

publication or the How To Get Tax Help section

at the end of this publication, go to the IRS In-

teractive Tax Assistant page at IRS.gov/

Help/ITA where you can find topics by using the

search feature or viewing the categories listed.

Getting tax forms, instructions, and pub-

lications. Go to IRS.gov/Forms to download

current and prior-year forms, instructions, and

publications.

Ordering tax forms, instructions, and

publications. Go to IRS.gov/OrderForms to or-

der current forms, instructions, and publica-

tions; call 800-829-3676 to order prior-year

forms and instructions. The IRS will process

your order for forms and publications as soon

as possible. Don’t resubmit requests you’ve al-

ready sent us. You can get forms and publica-

tions faster online.

Useful Items

You may want to see:

Publication

504 Divorced or Separated Individuals

523 Selling Your Home

527 Residential Rental Property

530 Tax Information for Homeowners

See How To Get Tax Help at the end of this pub-

lication for information about getting these pub-

lications.

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 in-

terest 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, or a second

mortgage.

You can’t deduct home mortgage interest

unless the following conditions are met.

•

You file Form 1040 or 1040-SR and itemize

deductions on Schedule A (Form 1040).

•

The mortgage is a secured debt on a quali-

fied 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.

Note. Interest on home equity loans and

lines of credit are deductible only if the bor-

rowed funds are used to buy, build, or substan-

tially improve the taxpayer’s home that secures

the loan. The loan must be secured by the tax-

payer’s main home or second home (qualified

residence), and meet other requirements.

Fully deductible interest. In most cases, you

can deduct all of your home mortgage interest.

504

523

527

530

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

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 inter-

est you can deduct.

The three categories are as follows.

1. Mortgages you took out on or before Octo-

ber 13, 1987 (called grandfathered debt).

2. Mortgages you (or your spouse if married

filing a joint return) took out after October

13, 1987, and prior to December 16, 2017

(see binding contract exception below), to

buy, build, or substantially improve your

home (called home acquisition debt), but

only if throughout 2023 these mortgages

plus any grandfathered debt totaled $1

million or less ($500,000 or less if married

filing separately).

Exception. A taxpayer who enters into

a written binding contract before Decem-

ber 15, 2017, to close on the purchase of

a principal residence before January 1,

2018, and who purchases such residence

before April 1, 2018, is considered to have

incurred the home acquisition debt prior to

December 16, 2017.

3. Mortgages you (or your spouse if married

filing a joint return) took out after Decem-

ber 15, 2017, to buy, build, or substantially

improve your home (called home acquisi-

tion debt), but only if throughout 2023

these mortgages plus any grandfathered

debt totaled $750,000 or less ($375,000 or

less if married filing separately).

The dollar limits for the second and third cate-

gories apply to the combined mortgages on

your main home and second home.

See Part II for more detailed definitions of

grandfathered debt and home acquisition debt.

You can use Figure A to check whether your

home mortgage interest is fully deductible.

Page 2 of 18 Fileid: … tions/p936/2023/a/xml/cycle05/source 11:38 - 3-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

2 Publication 936 (2023)

Yes

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 conditions to deduct home

mortgage interest?

Were all of your home mortgages taken out

on or before October 13, 1987?

You can’t deduct the interest payments as home

mortgage interest.

Go to Part II of this publication to determine the

limits on your deductible home mortgage interest.

Were your (or your spouse

’

s if married ling a joint

return) grandfathered debt plus home acquisition

debt balances $750,000 or less ($375,000 or less if

married ling separately) (or $1 million or less

($500,000 if married ling separately) if all debt was

incurred prior to December 16, 2017) at all times

during the year?

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 after

October 13, 1987, used to buy, build, or substantially

improve the main home secured by that main home

mortgage or used to buy, build, or substantially

improve the second home secured by that second

home mortgage, or both?

Were your (or your spouse

’

s if married ling a joint

return) mortgage balances $750,000 or less

($375,000 or less if married ling separately)

(or $1 million or less ($500,000 if married ling

separately) if all debt was incurred prior to

December 16, 2017) at all times during the year?

 You must itemize deductions on Schedule A (Form 1040). The loan must be a secured debt on a qualied home. See Part I, Home Mortgage Interest, earlier.

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

 A taxpayer who enters into a written binding contract before December 15, 2017, to close on the purchase of a principal residence before January 1, 2018,

and who purchases such residence before April 1, 2018, is considered to have incurred the home acquisition debt prior to December 16, 2017, and may use

the 2017 threshold amounts of $1,000,000 ($500,000 for married ling separately).

See Part II of this publication for more information about grandfathered debt and home acquisition debt.

Yes

Secured Debt

You can deduct your home mortgage interest

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

cured debt is one in which you sign an instru-

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

land contract) that:

•

Makes your ownership in a qualified home

security for payment of the debt;

•

Provides, in case of default, that your home

could satisfy the debt; and

•

Is recorded or is otherwise perfected under

any state or local law that applies.

In other words, your mortgage is a secured

debt if you put your home up as collateral to

protect the interests of the lender. If you can't

pay the debt, your home can then serve as pay-

ment to the lender to satisfy (pay) the debt. In

this publication, mortgage will refer to secured

debt.

Debt not secured by home. A debt isn’t se-

cured by your home if it is secured solely be-

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 se-

cured debt unless it is recorded or otherwise

perfected under state law.

Page 3 of 18 Fileid: … tions/p936/2023/a/xml/cycle05/source 11:38 - 3-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Publication 936 (2023) 3

Example. Ari owns a home subject to a

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

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

$40,000 mortgage. Ari continues to make the

payments on the $40,000 note. Palmer pays

$10,000 down and gives Ari a $90,000 note se-

cured by a wraparound mortgage on the home.

Ari doesn't record or otherwise perfect the

$90,000 mortgage under the state law that ap-

plies. Therefore, the mortgage isn't a secured

debt and Palmer can't deduct any of the interest

paid 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 contin-

ues for all later tax years. You can revoke your

choice only with the consent of the 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 ex-

pense) whether or not it qualifies as home mort-

gage 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 Co-

operative Housing Corporations near the end of

this Part I.

Qualified Home

For you to take a home mortgage interest de-

duction, your debt must be secured by a quali-

fied home. This means your main home or your

second home. A home includes a house, con-

dominium, cooperative, mobile home, house

trailer, boat, or similar property that has sleep-

ing, 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 consid-

ered 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 or-

dinarily 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 must also 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 lon-

ger. If you don't use the home long enough, it is

considered rental property and not a second

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 be-

tween 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, later.)

Renting out part of home. If you rent out

part of a qualified home to another person (ten-

ant), you can treat the rented part as being used

by you for residential living only if all of the fol-

lowing 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 sepa-

rate 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 depend-

ents 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 ex-

plains how to figure your deduction for the busi-

ness use of your home, which includes the busi-

ness 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 be-

comes 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 af-

ter it is destroyed in a fire, storm, tornado, earth-

quake, 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 pe-

riod 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 loca-

ted.

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 in-

terest 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 re-

quirement. To know whether you meet that re-

quirement, 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 situa-

tions that may affect your deduction.

Late payment charge on mortgage pay-

ment. You can deduct as home mortgage inter-

est a late payment charge if it wasn't for a spe-

cific 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 includ-

ing, the date of the sale.

Example. Sasha and Harper Smith sold

their home on May 7. Through April 30, they

made home mortgage interest payments of

$1,220. The settlement sheet for the sale of the

home showed $50 interest for the 6-day period

in May up to, but not including, the date of sale.

Their mortgage interest deduction is $1,270

($1,220 + $50).

Page 4 of 18 Fileid: … tions/p936/2023/a/xml/cycle05/source 11:38 - 3-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

4 Publication 936 (2023)

Prepaid interest. If you pay interest in ad-

vance 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, dis-

cussed later.

Mortgage interest credit. You may be able to

claim a mortgage interest credit if you were is-

sued 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 in-

terest deduction by the amount of the credit.

See Form 8396 and Pub. 530 for more infor-

mation on the mortgage interest credit.

Ministers' and military housing allowance.

If you're a minister or a member of the uni-

formed services and receive a housing allow-

ance that isn't taxable, you can still deduct your

home mortgage interest. For more information,

see Pub. 3 (military) or Pub. 517 (ministers).

Mortgage assistance payments under sec-

tion 235 of the National Housing Act. If you

qualify for mortgage assistance payments for

lower-income families under section 235 of the

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.

No other effect on taxes. Don’t include

these mortgage assistance payments in your in-

come. Also, don't use these payments to reduce

other deductions, such as real estate taxes.

Homeowner Assistance Fund. The Home-

owner Assistance Fund program (HAF) was es-

tablished to provide financial assistance to eligi-

ble homeowners for purposes of paying certain

expenses related to their principal residence to

prevent mortgage delinquencies, defaults, fore-

closures, loss of utilities or home energy serv-

ices, and also displacements of homeowners

experiencing financial hardship after January

21, 2020. If you are a homeowner who received

assistance under the HAF, the payments from

the HAF program are not considered income to

you and you cannot take a deduction or credit

for expenditures paid from the HAF program.

See sections on State and Local Real Estate

Taxes and Home Mortgage Interest, in Pub.

530, to determine whether 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. For more details about the HAF program,

see Homeowner Assistance Fund in Pub. 530. If

you received HAF funds from an Indian Tribal

Government or an Alaska Native Corporation

and wish more details about the HAF program,

see FAQs for Payments by Indian Tribal

Governments and Alaska Native Corporations

to Individuals Under COVID-Relief Legislation.

Divorced or separated individuals. If a quali-

fied pre-2019 divorce or separation agreement

requires you to pay home mortgage interest on

a home owned by your spouse or former

spouse or by both of you, the payment of inter-

est may be alimony. See the discussion of Pay-

ments for jointly owned home under Alimony in

Pub. 504, Divorced or Separated Individuals.

Redeemable ground rents. In some states

(such as Maryland), you can buy your home

subject to a ground rent. A ground rent is an ob-

ligation 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 pay-

ments 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 pay-

ments to which he or she is entitled.

Payments made to end the lease and to buy

the lessor's entire interest in the land aren't de-

ductible as mortgage interest.

Nonredeemable ground rents. Payments

on a nonredeemable ground rent aren't mort-

gage 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 combi-

nation 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 advan-

ces and not income, the amount you receive

isn't taxable. Generally, any interest (including

original issue discount) accrued on a reverse

mortgage is considered interest on home equity

debt and isn’t deductible.

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 inter-

est. This is true even if the settlement papers

call them interest. You can't deduct these pay-

ments as home mortgage interest.

Mortgage proceeds invested in tax-exempt

securities. You can't deduct the home mort-

gage interest on grandfathered debt if you used

the proceeds of the mortgage to buy securities

or certificates that produce tax-free income.

“Grandfathered debt” is defined in Part II of this

publication.

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

must generally include the refund in income in

the year you receive it. However, you need to in-

clude 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 refun-

ded to you or was used to reduce the outstand-

ing principal on your mortgage. If you need to

include the refund in income, report it on Sched-

ule 1 (Form 1040), line 8z.

If you received a refund of interest you over-

paid in an earlier year, you will generally receive

a Form 1098, Mortgage Interest Statement,

showing the refund in box 4. For information

about Form 1098, see Form 1098, Mortgage In-

terest Statement, later.

For more information on how to treat refunds

of interest deducted in earlier years, see Recov-

eries in Pub. 525, Taxable and Nontaxable In-

come.

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.

A borrower is treated as paying any points

that a home seller pays for the borrower's mort-

gage. 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 pre-

paid interest, you generally deduct them ratably

over the life (term) of the mortgage. See Deduc-

tion Allowed Ratably next. If the loan is a home

equity, line of credit, or credit card loan and the

proceeds from the loan are not used to buy,

build, or substantially improve the home, the

points are not deductible.

For exceptions to the general rule, see De-

duction Allowed in Year Paid, later.

Deduction Allowed Ratably

If you don't meet the tests listed under Deduc-

tion 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 of 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.

Page 5 of 18 Fileid: … tions/p936/2023/a/xml/cycle05/source 11:38 - 3-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Publication 936 (2023) 5

Yes

Figure B. Are My Points Fully Deductible This Year?

Start Here:

Is the loan secured by your main home?

Is the payment of points an established

business practice in your area?

Do you use the cash method of

accounting?

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?*

Did you take out the loan to substantially

improve your main home?

Did you take out the loan to buy or build

your main home?

Were the points gured as a percentage

of the principal amount of the mortgage?

Is the amount paid clearly shown as

points on the settlement statement?

You can fully deduct the points this year

on Schedule A (Form 1040).

Were the points paid in place of

amounts that ordinarily are separately

stated on the settlement sheet?

You cannot fully deduct the points this

year. See the discussion on Points,

earlier.

* 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.

Were the points paid more than the

amount generally charged in your area?

Page 6 of 18 Fileid: … tions/p936/2023/a/xml/cycle05/source 11:38 - 3-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

6 Publication 936 (2023)

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 ac-

counting. In 2023, you took out a $100,000

home mortgage 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 2023. You can deduct $60

[($4,800 ÷ 240 months) x 3 payments] in 2023.

In 2024, 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.

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 are ordinarily stated sepa-

rately 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 clos-

ing, 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 in-

clude 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 figured as a percentage

of the principal amount of the mortgage.

9. The amount is clearly shown on the settle-

ment 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

substantially 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 loans

secured by your second home. You can

deduct these points only over the life of the

loan.

Refinancing. Generally, points you pay to refi-

nance 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 substantially improve

your main home and you meet the first six tests

listed under Deduction Allowed in Year Paid,

earlier, you can fully deduct the part of the

points related to the improvement in the year

you paid them with your own funds. You can de-

duct the rest of the points over the life of the

loan.

Example 1. In 1999, you got a mortgage to

buy a home. In 2023, you refinanced that mort-

gage with a 15-year $100,000 mortgage loan.

The mortgage is secured by your home. To get

the new loan, you 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 are ordinarily

stated separately on the settlement statement.

You paid the points out of your private funds,

rather than out of the proceeds of the new loan.

The payment of points is an established prac-

tice in the area, and the points charged aren't

more than the amount generally charged there.

Your first payment on the new loan was due July

1. You made six payments on the loan in 2023

and are a cash basis taxpayer.

You used the funds from the new mortgage

to repay your existing mortgage. Although the

new mortgage loan was for your continued own-

ership of your main home, it wasn't for the pur-

chase or substantial improvement of that home.

You can't deduct all of the points in 2023. You

can deduct two points ($2,000) ratably over the

life of the loan. You deduct $67 [($2,000 ÷ 180

months) × 6 payments] of the points in 2023.

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 you used $25,000 of the

loan proceeds to substantially improve your

home and $75,000 to repay your existing mort-

gage. You deduct 25% ($25,000 ÷ $100,000) of

the points ($2,000) in 2023. Your deduction is

$500 ($2,000 × 25% (0.25)).

You also deduct the ratable part of the re-

maining $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 2023.

The total amount you deduct in 2023 is $550

($500 + $50).

Special Situations

This section describes certain special situations

that may affect your deduction of points.

CAUTION

Original issue discount. If you don't qualify to

either deduct the points in the year paid or de-

duct 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.

Amounts charged for services. Amounts

charged by the lender for specific services con-

nected to the loan aren't interest. Examples of

these charges are:

•

Appraisal fees,

•

Department of Veterans Affairs (VA) fund-

ing 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 de-

duct these fees as interest. But they are a sell-

ing 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

or she had paid them. If all the tests under De-

duction 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 de-

ducts 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,

earlier), 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 De-

duction Allowed in Year Paid, earlier, except that

the points paid were more than generally paid in

Page 7 of 18 Fileid: … tions/p936/2023/a/xml/cycle05/source 11:38 - 3-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Publication 936 (2023) 7

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 de-

duction for points over the life of the mortgage,

you can deduct any remaining balance in the

year the mortgage ends. However, if you refi-

nance 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 prepay-

ment, refinancing, foreclosure, or similar event.

Example. You paid $3,000 in points in 2012

that you had to spread out over the 15-year life

of the mortgage. You deduct $200 points per

year. Through 2023, you have deducted $2,200

of the points.

You prepaid your mortgage in full in 2023.

You can deduct the remaining $800 of points in

2023.

Limits on deduction. You can't fully deduct

points paid on a mortgage that exceeds the lim-

its discussed in Part II. See the Table 1 Instruc-

tions, later, for line 13.

Form 1098. The mortgage interest statement

you receive should show not only the total inter-

est paid during the year, but also your mortgage

insurance premiums and deductible points paid

during the year. See Form 1098, Mortgage In-

terest 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 will generally 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 institu-

tion 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, any mortgage insur-

ance premiums you paid, and if you purchased

a principal residence during the year, it will also

show the points paid during the year, including

seller-paid points, that are deductible as interest

to the extent you do not exceed the home ac-

quisition debt limit. See Part II. Limits on Home

Mortgage Interest Deduction, later. However,

the statement 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, it may report points that you

can't deduct, particularly if you are filing married

filing separately or have mortgages for multiple

properties. You must take care to deduct only

those points legally allowable. Additionally,

certain points not included on Form 1098 may

also be deductible, either in the year paid or

over the life of the loan. See the earlier discus-

sion of Points to determine whether you can de-

duct points not shown on Form 1098.

Prepaid interest on Form 1098. If you pre-

paid interest in 2023 that accrued in full by Jan-

uary 15, 2024, this prepaid interest may be in-

cluded in box 1 of Form 1098. However, you

can't deduct the prepaid amount for January

2024 in 2023. (See Prepaid interest, earlier.)

You will have to figure the interest that accrued

for 2024 and subtract it from the amount in

box 1. You will include the interest for January

2024 with other interest you pay for 2024.

Refunded interest. If you received a refund of

mortgage interest you overpaid in an earlier

year, you will generally receive a Form 1098

showing the refund in box 4. See Refunds of in-

terest, earlier.

How To Report

Generally, you can deduct the home mortgage

interest and points reported to you on Form

1098 on Schedule A (Form 1040), line 8a. How-

ever, any interest showing in box 1 of Form

1098 from a home equity loan, or a line of credit

or credit card loan secured by the property, is

not deductible if the proceeds were not used to

buy, build, or substantially improve a qualified

home. If you paid more deductible interest to

the financial institution than the amount shown

on Form 1098, show the portion of the deducti-

ble interest that was omitted from Form 1098 on

line 8b. Attach a statement to your paper return

explaining the difference and print “See at-

tached” next to line 8b.

Deduct home mortgage interest that wasn't

reported to you on Form 1098 on Schedule A

(Form 1040), line 8b. If you paid home mort-

gage 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 8b. 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 Certifi-

cation, 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 ei-

ther a social security number, an individual tax-

payer identification number (issued by the IRS),

or an employer identification number (EIN).

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 8c.

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 inter-

est 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 paper return explaining this.

Show how much of the interest each of you

paid, and give the name and address of the per-

son who received the form. Deduct your share

of the interest on Schedule A (Form 1040),

line 8b, 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 8a. Let each of the other borrowers

know what their share is.

Mortgage proceeds used for business or in-

vestment. If your home mortgage interest de-

duction 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 ac-

tivities. The Table 1 Instructions for line 16 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 coopera-

tive housing corporation owned by a ten-

ant-stockholder. This applies only if the ten-

ant-stockholder is entitled to live in the house or

apartment because of owning stock in the co-

operative.

Cooperative housing corporation. This is a

corporation that meets all of the following condi-

tions.

1. Has only one class of stock outstanding.

2. Has no stockholders other than those that

own the stock who 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.

4. Meets at least one of the following require-

ments.

a. Receives at least 80% of its gross in-

come for the year in which the mort-

gage 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 corpora-

tion changed to cooperative owner-

ship.

b. At all times during the year, at least

80% of the total square footage of the

corporation's property is used or avail-

able for use by the tenant-stockhold-

ers for residential or residential-rela-

ted use.

c. At least 90% of the corporation's ex-

penditures paid or incurred during the

year are for the acquisition, construc-

tion, management, maintenance, or

care of corporate property for the ben-

efit of the tenant-stockholders.

Page 8 of 18 Fileid: … tions/p936/2023/a/xml/cycle05/source 11:38 - 3-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

8 Publication 936 (2023)

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 tenant-

stockholder to treat unsecured debt as se-

cured 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 in-

terest rules.

Figuring deductible home mortgage inter-

est. Generally, if you're a tenant-stockholder,

you can deduct payments you make for your

share of the interest paid or incurred by the co-

operative. The interest must be on a debt to

buy, build, change, improve, or maintain the co-

operative's housing, or on a debt to buy the

land.

Figure your share of this interest by multiply-

ing the total by the following fraction.

Your shares of stock in the

cooperative

The total shares of stock

in the cooperative

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 divi-

dend that the cooperative receives. The patron-

age dividend is a partial refund to the coopera-

tive housing corporation of mortgage interest if

paid in a prior year.

If you receive a Form 1098 from the cooper-

ative housing corporation, the form should show

only the amount you can deduct.

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, and its home

acquisition 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 se-

cured by your stock.

Form 1098. The cooperative should give

you a Form 1098 showing your share of the in-

terest. Use the rules in this publication to deter-

mine your deductible mortgage interest.

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 ex-

pense 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 inter-

est, earlier.

Your home mortgage interest deduction is

limited to the interest on the part of your home

mortgage debt that isn't more than your quali-

fied 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. 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 sub-

stantially improve a qualified home (your main

or second home). It must also be secured by

that home.

If the amount of your mortgage is more than

the cost of the home plus the cost of any sub-

stantial improvements, only the debt that isn't

more than the cost of the home plus substantial

improvements qualifies as home acquisition

debt.

Home acquisition debt limit. The total

amount you (or your spouse if married filing a

joint return) can treat as home acquisition debt

on your main home and second home is limited

based on when the debt is secured.

•

For debt secured after October 13, 1987,

and prior to December 16, 2017, the limit is

$1 million ($500,000 if married filing sepa-

rately).

•

For debt secured after December 15,

2017, the limit is $750,000 ($375,000 if

married filing separately). However, a tax-

payer who enters into a written binding

contract before December 15, 2017, to

close on the purchase of a principal resi-

dence before January 1, 2018, and who

purchases such residence before April 1,

2018, is considered to have incurred the

home acquisition debt prior to December

16, 2017.

The limits above are reduced (but not below

zero) by the amount of your grandfathered debt

(discussed later).

Refinanced home acquisition debt. Any se-

cured debt you use to refinance home acquisi-

tion debt is treated as home acquisition debt.

However, the new debt will qualify as home ac-

quisition debt only up to the amount of the bal-

ance 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.

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 se-

cured 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 be-

cause the property isn't a qualified home. How-

ever, if the property later becomes a qualified

home, the debt may qualify after that time.

Mortgage treated as used to buy, build, or

substantially improve home. A mortgage se-

cured 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 mort-

gage. 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 Exam-

ple 1, later.)

2. You build or substantially improve your

home and take out the mortgage before

the work is completed. The home acquisi-

tion debt is limited to the amount of the ex-

penses incurred within 24 months before

the date of the mortgage.

3. You build or substantially 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 be-

cause you bought the home within 90 days be-

fore you took out the mortgage. The entire mort-

gage qualifies as home acquisition debt

because it wasn't more than the home's cost.

Example 2. On January 31, Logan began

building a home on the lot that Logan owned.

Logan used $45,000 of personal funds to build

the home. The home was completed on Octo-

ber 31. On November 21, Logan 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 en-

tire mortgage qualifies as home acquisition debt

because it wasn't more than the expenses in-

curred within the period beginning 24 months

before the home was completed. This is illustra-

ted by Figure C.

Figure C.

Logan

Starts

Building

Home

Completed

($45,000 in

Personal

Funds Used)

$36,000

Mortgage

Taken Out

Jan. 31 Oct. 31

Nov. 21

9 Months

(Within 24 Months)

22 Days

(Within 90 Days)

Page 9 of 18 Fileid: … tions/p936/2023/a/xml/cycle05/source 11:38 - 3-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Publication 936 (2023) 9

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 ap-

proved. If a timely application you make is rejec-

ted, a reasonable additional time will be allowed

to make a new application.

Cost of home or improvements. To deter-

mine your cost, include amounts paid to acquire

any interest in a qualified home or to substan-

tially improve the home.

The cost of building or substantially improv-

ing a qualified home includes the costs to ac-

quire real property and building materials, fees

for architects and design plans, and required

building permits.

Substantial improvement. An improve-

ment 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 substan-

tially improves your qualified home, you can in-

clude the painting costs in the cost of the im-

provements.

Acquiring an interest in a home because

of a divorce. If you incur debt to acquire the in-

terest 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 di-

vide 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, earlier.

Grandfathered Debt

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 pro-

ceeds doesn't matter.

Grandfathered debt isn't limited. All of the in-

terest you paid on grandfathered debt is fully

deductible home mortgage interest. However,

the amount of your grandfathered debt reduces

the limit for home acquisition debt.

Refinanced grandfathered debt. If you refi-

nanced 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 debt (so long

as the proceeds were used to buy, build, or sub-

stantially improve the home), and the mortgage

is a mixed-use mortgage (discussed later under

Average Mortgage Balance in the Table 1 In-

structions). The debt must be secured by the

qualified home.

You treat grandfathered debt that was refi-

nanced after October 13, 1987, as grandfath-

ered debt only for the term left on the debt that

was refinanced. After that, you treat it as home

acquisition debt to the extent that it was used to

buy, build, or substantially improve the home.

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 refi-

nancing. This term can't be more than 30 years.

Example. You took out a $200,000 first

mortgage on your home in 1986. The mortgage

was a 7-year balloon note and the entire bal-

ance on the note was due in 1993. You refi-

nanced the debt in 1993 with a new 30-year

mortgage. The refinanced debt is treated as

grandfathered debt for its entire term (30 years).

Table 1 Instructions

You can deduct all of the interest you paid dur-

ing the year on mortgages secured by your

main home or second home in either of the fol-

lowing two situations.

•

All the mortgages are grandfathered debt.

•

The total of the mortgage balances for the

entire year is within the limits discussed

earlier under Home Acquisition 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

main and second home regardless of

how many mortgages you have.

TIP

Page 10 of 18 Fileid: … tions/p936/2023/a/xml/cycle05/source 11:38 - 3-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

10 Publication 936 (2023)

Worksheet To Figure Your Qualified Loan Limit and Deductible Home

Mortgage Interest for the Current Year

See the Table 1 Instructions.

Table 1.

Keep for Your Records

Part I Qualified Loan Limit

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

instructions ...................................................................

2. Enter the average balance of all your home acquisition debt incurred after October

12, 1987, and prior to December 16, 2017. See the line 2 instructions ..............

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

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

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

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

•

If you have no home acquisition debt incurred after December 15, 2017, or the

amount on line 6 is $750,000 ($375,000 if married filing separately) or more,

line 6 is your qualified loan limit. Enter this amount on line 11 and go to Part II,

line 12.

•

If you have home acquisition debt incurred after December 15, 2017, go to line 7.

7. Enter the average balance of all your home acquisition debt incurred after December

15, 2017. See the line 7 instructions ............................................

8. Enter $750,000 ($375,000 if married filing separately) ............................

9. Enter the larger of the amount on line 6 or the amount on line 8 ....................

10. Add the amounts on lines 6 and 7. Enter the total here ............................

10.

11. Enter the smaller of line 9 or line 10. This is your qualified loan limit .............

11.

Part II Deductible Home Mortgage Interest

12. Enter the total of the average balances of all mortgages from lines 1, 2, and 7 on all

qualified homes.

See the line 12 instructions ....................................................

12.

•

If line 11 is less than line 12, go on to line 13.

•

If line 11 is equal to or more than line 12, stop here. All of your interest on all the

mortgages included on line 12 is deductible as home mortgage interest on

Schedule A (Form 1040).

13. Enter the total amount of interest that you paid on the loans from line 12. See the

line 13 instructions ............................................................

13.

14. Divide the amount on line 11 by the amount on line 12. Enter the result as a decimal

amount (rounded to three places) ...............................................

14. × .

15. Multiply the amount on line 13 by the decimal amount on line 14. Enter the result.

This is your deductible home mortgage interest. Enter this amount on

Schedule A (Form 1040) .......................................................

15.

16. Subtract the amount on line 15 from the amount on line 13. Enter the result. This

isn't home mortgage interest. See the line 16 instructions ...................... 16.

Page 11 of 18 Fileid: … tions/p936/2023/a/xml/cycle05/source 11:38 - 3-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Publication 936 (2023) 11

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,

7, and 12 of Table 1. You can use the highest

mortgage balances during the year, but you

may benefit most by using the average balan-

ces. The following are methods you can use to

figure your average mortgage balances. How-

ever, 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 ap-

ply.

•

You didn't borrow any new amounts on the

mortgage during the year. (This doesn't in-

clude 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

time because of changes in the interest

rate.

To figure your average balance, com-

plete the following worksheet.

1. 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) ........

2. 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) .....

3. Add amounts on lines 1 and

2 ..........................

4. Divide the amount on line 3 by

2.0. Enter the result ..........

Interest paid divided by interest rate

method. You can use this method if at all times

in 2023 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.

1. Enter the interest paid in 2023.

Don't include points, or any

interest paid in 2023 that is for a

year after 2023. However, do

include interest that is for 2023

but was paid in an earlier

year ........................

2. Enter the annual interest rate on

the mortgage. If the interest rate

varied in 2023, use the lowest

rate for the year ..............

3. Divide the amount on line 1 by

the amount on line 2. Enter the

result .......................

Example. You had a mortgage secured by

your main home all year. You paid interest of

$2,500 on this loan. The interest rate on the

loan was 9% (0.09) all year. Your average bal-

ance using this method is $27,778, figured as

follows.

1. Enter the interest paid in 2023.

Don’t include points, mortgage

insurance premiums, or any

interest paid in 2023 that is for

a year after 2023. However, do

include interest that is for 2023

but was paid in an earlier

year .......................

$2,500

2. Enter the annual interest rate

on the mortgage. If the interest

rate varied in 2023, use the

lowest rate for the year .......

0.09

3. 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 bal-

ance for the year. You can treat the balance as

zero for any month the mortgage wasn't se-

cured by your qualified home.

For each mortgage, figure your average bal-

ance 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 bal-

ance for the year, you can use that amount.

Example. You had a home loan secured by

your main home all year. You received monthly

statements showing your average balance for

each month. You can figure your average bal-

ance for the year by adding your monthly aver-

age balances and dividing the total by 12.

Mixed-use mortgages. A mixed-use mort-

gage 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 mort-

gage 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, 2, and 7 of Table 1 by in-

cluding the separate average balances of any

grandfathered debt and home acquisition debt

(determined by the date the debt was acquired)

in your mixed-use mortgage. Don’t use the

methods described earlier in this section to fig-

ure the average balance of either category. In-

stead, 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 cate-

gory. Principal payments on a mixed-use

mortgage are applied in full to each cate-

gory of debt, until its balance is zero, in the

following order.

a. First, any home equity debt not used

to buy, build, or substantially improve

the home.

b. Next, any grandfathered debt.

c. Finally, any home acquisition debt.

2. Add together the monthly balances figured

for b and c in (1).

Complete line 12 of Table 1 using the figure

from line 2 above.

Example 1. In 1986, you took out a first

mortgage of $1,400,000. The mortgage was a

7-year balloon note and the entire balance on

the note was due in 1993. You refinanced the

debt in 1993 with a new 30-year mortgage

(grandfathered debt). On March 2, 2023, when

the home had a fair market value of $1,700,000

and you owed $500,000 on the mortgage, you

took out a second mortgage for $200,000. You

used $180,000 of the proceeds to make sub-

stantial improvements to your home (home ac-

quisition debt) and the remaining $20,000 to

buy a car (home equity debt). Under the loan

agreement, you must make principal payments

of $1,000 at the end of each month. During

2023, your principal payments on the second

mortgage totaled $10,000.

To complete Table 1, line 7, you must figure

a separate average balance for the part of your

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 your 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 2023 was $150,000

($1,800,000 ÷ 12).

Example 2. The facts are the same as in

Example 1. In 2024, your January through Octo-

ber principal payments on your second mort-

gage are applied to the home equity debt, re-

ducing it to zero. The balance of the home

acquisition debt remains $180,000 for each of

those months. Because your November and

December principal payments are applied to the

home acquisition debt, the November balance

Page 12 of 18 Fileid: … tions/p936/2023/a/xml/cycle05/source 11:38 - 3-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

12 Publication 936 (2023)

is $179,000 ($180,000 − $1,000) and the De-

cember 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 ac-

quisition debt for 2024 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 to-

tal 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, and prior to De-

cember 16, 2017, 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 for the current year

for any home acquisition debt part of a

mixed-use mortgage.

Line 7

Figure the average balance for the current year

of each mortgage you took out on all qualified

homes after December 15, 2017, to buy, build,

or substantially improve the home (home ac-

quisition debt). Add the results together and en-

ter the total on line 7.

Line 12

Figure the average balance for the current year

of each outstanding home mortgage. Add the

average balances together and enter the total

on line 12. See Average Mortgage Balance,

earlier.

Note. If the average balance consists of

more than one category of debt (grandfathered

debt, home acquisition debt, and home equity

debt), see Mixed-use mortgages, earlier, to fig-

ure the average mortgage balance.

Line 13

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 state-

ment from the lender. This form will show the

amount of interest to enter on line 13. Also, in-

clude 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 in-

clude points or mortgage insurance premiums

on this line.

Claiming your deductible points. Figure

your deductible points as follows.

1. Figure your deductible points for the cur-

rent year using the rules explained under

Points in Part I, earlier.

2. Multiply the amount in item 1 by the deci-

mal amount on line 14. Enter the result on

Schedule A (Form 1040), line 8a or 8c,

whichever applies. This amount is fully de-

ductible.

3. Subtract the result in item 2 from the

amount in item 1. This amount isn't deduc-

tible as home mortgage interest. However,

if you used any of the loan proceeds for

business or investment activities, see the

instructions for line 16 next.

Line 16

You can't deduct the amount of interest on

line 16 as home mortgage interest. If you didn't

use any of the proceeds of any mortgage inclu-

ded on line 12 of the worksheet for business, in-

vestment, or other deductible activities, then all

the interest on line 16 is personal interest. Per-

sonal interest isn't deductible.

Page 13 of 18 Fileid: … tions/p936/2023/a/xml/cycle05/source 11:38 - 3-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Publication 936 (2023) 13

If you did use all or part of any mortgage

proceeds for business, investment, or other de-

ductible activities, the part of the interest on

line 16 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 inter-

est. See Allocation of Interest in Temporary

Regulations section 1.163-8T.

The following two rules describe how to allo-

cate the interest on line 16 to a business or in-

vestment activity.

•

If you used all of the proceeds of the mort-

gages on line 12 for one activity, then all

the interest on line 16 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 12 for more than one activity, then

you can allocate the interest on line 16

among the activities in any manner you se-

lect (up to the total amount of interest oth-

erwise allocable to each activity, explained

next).

You figure the total amount of interest other-

wise allocable to each activity by multiplying the

amount on line 13 by the following fraction.

Amount on line 12

allocated to that activity

Total amount on line 12

Example. You had two mortgages (A and

B) on your main home during the entire year.

Mortgage A had an average balance of

$90,000, and mortgage B had an average bal-

ance of $110,000.

You determine that the proceeds of mort-

gage A are allocable to personal expenses for

the entire year. The proceeds of mortgage B are

allocable to your business for the entire year.

You paid $14,000 of interest on mortgage A and

$16,000 of interest on mortgage B. You figure

the amount of home mortgage interest you can

deduct by using Table 1. You determine that

$15,000 of the interest can be deducted as

home mortgage interest.

The interest you can allocate to your busi-

ness is the smaller of:

1. The amount on Table 1, line 16, of the

worksheet ($15,000); or

2. The total amount of interest allocable to

the business ($16,500), figured by multi-

plying the amount on line 13 (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 you can al-

locate to your business. You deduct this amount

on your 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 down-

load free publications, forms, or instructions, go

to IRS.gov to find resources that can help you

right away.

Preparing and filing your tax return. After

receiving all your wage and earnings state-

ments (Forms W-2, W-2G, 1099-R, 1099-MISC,

1099-NEC, etc.); unemployment compensation

statements (by mail or in a digital format) or

other government payment statements (Form

1099-G); and interest, dividend, and retirement

statements from banks and investment firms

(Forms 1099), you have several options to

choose from to prepare and file your tax return.

You can prepare the tax return yourself, see if

you qualify for free tax preparation, or hire a tax

professional to prepare your return.

Free options for tax preparation. Your op-

tions for preparing and filing your return online

or in your local community, if you qualify, include

the following.

•

Free File. This program lets you prepare

and file your federal individual income tax

return for free using software or Free File

Fillable Forms. However, state tax prepara-

tion may not be available through Free File.

Go to IRS.gov/FreeFile to see if you qualify

for free online federal tax preparation, e-fil-

ing, and direct deposit or payment options.

•

VITA. The Volunteer Income Tax Assis-

tance (VITA) program offers free tax help to

people with low-to-moderate incomes, per-

sons with disabilities, and limited-Eng-

lish-speaking taxpayers who need help

preparing their own tax returns. Go to

IRS.gov/VITA, download the free IRS2Go

app, or call 800-906-9887 for information

on free tax return preparation.

•

TCE. 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. Go to IRS.gov/TCE or

download the free IRS2Go app for informa-

tion on free tax return preparation.

•

MilTax. Members of the U.S. Armed

Forces and qualified veterans may use Mil-

Tax, a free tax service offered by the De-

partment of Defense through Military One-

Source. For more information, go to

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 Schedule 1 (Form 1040), line 21 Pub. 970, Tax Benefits for Education.

deductible home mortgage interest

and points reported on Form 1098

Schedule A (Form 1040), line 8a this publication (936).

deductible home mortgage interest

not reported on Form 1098

Schedule A (Form 1040), line 8b this publication (936).

deductible points not reported on

Form 1098

Schedule A (Form 1040), line 8c this publication (936).

deductible investment interest (other

than incurred to produce rents or

royalties)

Schedule A (Form 1040), line 9 Pub. 550, Investment Income and

Expenses.

deductible business interest

(non-farm)

Schedule C (Form 1040)

deductible farm business interest Schedule F (Form 1040) Pub. 225, Farmer's Tax Guide.

deductible interest incurred to

produce rents or royalties

Schedule E (Form 1040) Pub. 527, Residential Rental Property.

personal interest not deductible.

Page 14 of 18 Fileid: … tions/p936/2023/a/xml/cycle05/source 11:38 - 3-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

14 Publication 936 (2023)

MilitaryOneSource (MilitaryOneSource.mil/

MilTax).

Also, the IRS offers Free Fillable Forms,

which can be completed online and then

e-filed regardless of income.

Using online tools to help prepare your re-

turn. Go to IRS.gov/Tools for the following.

•

The Earned Income Tax Credit Assistant

(IRS.gov/EITCAssistant) determines if

you’re eligible for the earned income credit

(EIC).

•

The Online EIN Application (IRS.gov/EIN)

helps you get an employer identification

number (EIN) at no cost.

•

The Tax Withholding Estimator (IRS.gov/

W4App) makes it easier for you to estimate

the federal income tax you want your em-

ployer to withhold from your paycheck.

This is tax withholding. See how your with-

holding affects your refund, take-home pay,

or tax due.

•

The First-Time Homebuyer Credit Account

Look-up (IRS.gov/HomeBuyer) tool pro-

vides information on your repayments and

account balance.

•

The Sales Tax Deduction Calculator

(IRS.gov/SalesTax) figures the amount you

can claim if you itemize deductions on

Schedule A (Form 1040).

Getting answers to your tax ques-

tions. On IRS.gov, you can get

up-to-date information on current

events and changes in tax law.

•

IRS.gov/Help: A variety of tools to help you

get answers to some of the most common

tax questions.

•

IRS.gov/ITA: The Interactive Tax Assistant,

a tool that will ask you questions and,

based on your input, provide answers on a

number of tax topics.

•

IRS.gov/Forms: Find forms, instructions,

and publications. You will find details on

the most recent tax changes and interac-

tive links to help you find answers to your

questions.

•

You may also be able to access tax infor-

mation in your e-filing software.

Need someone to prepare your tax return?

There are various types of tax return preparers,

including enrolled agents, certified public ac-

countants (CPAs), accountants, and many oth-

ers who don’t have professional credentials. If

you choose to have someone prepare your tax

return, choose that preparer wisely. A paid tax

preparer is:

•

Primarily responsible for the overall sub-

stantive accuracy of your return,

•

Required to sign the return, and

•

Required to include their preparer tax iden-

tification number (PTIN).

Although the tax preparer always signs

the return, you're ultimately responsible

for providing all the information re-

quired for the preparer to accurately prepare

your return and for the accuracy of every item

reported on the return. Anyone paid to prepare

tax returns for others should have a thorough

CAUTION

understanding of tax matters. For more informa-

tion on how to choose a tax preparer, go to Tips

for Choosing a Tax Preparer on IRS.gov.

Employers can register to use Business

Services Online. The Social Security Adminis-

tration (SSA) offers online service at SSA.gov/

employer for fast, free, and secure W-2 filing op-

tions to CPAs, accountants, enrolled agents,

and individuals who process Form W-2, Wage

and Tax Statement, and Form W-2c, Corrected

Wage and Tax Statement.

IRS social media. Go to IRS.gov/SocialMedia

to see the various social media tools the IRS

uses to share the latest information on tax

changes, scam alerts, initiatives, products, and

services. At the IRS, privacy and security are

our highest priority. We use these tools to share

public information with you. Don’t post your so-

cial security number (SSN) or other confidential

information on social media sites. Always pro-

tect your identity when using any social net-

working site.

The following IRS YouTube channels provide

short, informative videos on various tax-related

topics in English, Spanish, and ASL.

•

Youtube.com/irsvideos.

•

Youtube.com/irsvideosmultilingua.

•

Youtube.com/irsvideosASL.

Watching IRS videos. The IRS Video portal

(IRSVideos.gov) contains video and audio pre-

sentations for individuals, small businesses,

and tax professionals.

Online tax information in other languages.

You can find information on IRS.gov/

MyLanguage if English isn’t your native lan-

guage.

Free Over-the-Phone Interpreter (OPI) Serv-

ice. The IRS is committed to serving taxpayers

with limited-English proficiency (LEP) by offer-

ing OPI services. The OPI Service is a federally

funded program and is available at Taxpayer

Assistance Centers (TACs), most IRS offices,

and every VITA/TCE tax return site. The OPI

Service is accessible in more than 350 lan-

guages.

Accessibility Helpline available for taxpay-

ers with disabilities. Taxpayers who need in-

formation about accessibility services can call

833-690-0598. The Accessibility Helpline can

answer questions related to current and future

accessibility products and services available in

alternative media formats (for example, braille,

large print, audio, etc.). The Accessibility Help-

line does not have access to your IRS account.

For help with tax law, refunds, or account-rela-

ted issues, go to IRS.gov/LetUsHelp.

Note. Form 9000, Alternative Media Prefer-

ence, or Form 9000(SP) allows you to elect to

receive certain types of written correspondence

in the following formats.

•

Standard Print.

•

Large Print.

•

Braille.

•

Audio (MP3).

•

Plain Text File (TXT).

•

Braille Ready File (BRF).

Disasters. Go to IRS.gov/DisasterRelief to re-

view the available disaster tax relief.

Getting tax forms and publications. Go to

IRS.gov/Forms to view, download, or print all

the forms, instructions, and publications you

may need. Or, you can go to IRS.gov/

OrderForms to place an order.

Getting tax publications and instructions in

eBook format. Download and view most tax

publications and instructions (including the In-

structions for Form 1040) on mobile devices as

eBooks at IRS.gov/eBooks.

IRS eBooks have been tested using Apple's

iBooks for iPad. Our eBooks haven’t been tes-

ted on other dedicated eBook readers, and

eBook functionality may not operate as inten-

ded.

Access your online account (individual tax-

payers only). Go to IRS.gov/Account to se-

curely access information about your federal tax

account.

•

View the amount you owe and a break-

down by tax year.

•

See payment plan details or apply for a

new payment plan.

•

Make a payment or view 5 years of pay-

ment history and any pending or sched-

uled payments.

•

Access your tax records, including key

data from your most recent tax return, and

transcripts.

•

View digital copies of select notices from

the IRS.

•

Approve or reject authorization requests

from tax professionals.

•

View your address on file or manage your

communication preferences.

Get a transcript of your return. With an on-

line account, you can access a variety of infor-

mation to help you during the filing season. You

can get a transcript, review your most recently

filed tax return, and get your adjusted gross in-

come. Create or access your online account at

IRS.gov/Account.

Tax Pro Account. This tool lets your tax pro-

fessional submit an authorization request to ac-

cess your individual taxpayer IRS online ac-

count. For more information, go to IRS.gov/

TaxProAccount.

Using direct deposit. The safest and easiest

way to receive a tax refund is to e-file and

choose direct deposit, which securely and elec-

tronically transfers your refund directly into your

financial account. Direct deposit also avoids the

possibility that your check could be lost, stolen,

destroyed, or returned undeliverable to the IRS.

Page 15 of 18 Fileid: … tions/p936/2023/a/xml/cycle05/source 11:38 - 3-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Publication 936 (2023) 15

Eight in 10 taxpayers use direct deposit to re-

ceive their refunds. If you don’t have a bank ac-

count, go to IRS.gov/DirectDeposit for more in-

formation on where to find a bank or credit

union that can open an account online.

Reporting and resolving your tax-related

identity theft issues.

•

Tax-related identity theft happens when

someone steals your personal information

to commit tax fraud. Your taxes can be af-

fected if your SSN is used to file a fraudu-

lent return or to claim a refund or credit.

•

The IRS doesn’t initiate contact with tax-

payers by email, text messages (including

shortened links), telephone calls, or social

media channels to request or verify per-

sonal or financial information. This includes

requests for personal identification num-

bers (PINs), passwords, or similar informa-

tion for credit cards, banks, or other finan-

cial accounts.

•

Go to IRS.gov/IdentityTheft, the IRS Iden-

tity Theft Central webpage, for information

on identity theft and data security protec-

tion for taxpayers, tax professionals, and

businesses. If your SSN has been lost or

stolen or you suspect you’re a victim of

tax-related identity theft, you can learn

what steps you should take.

•

Get an Identity Protection PIN (IP PIN). IP

PINs are six-digit numbers assigned to tax-

payers to help prevent the misuse of their

SSNs on fraudulent federal income tax re-

turns. When you have an IP PIN, it pre-

vents someone else from filing a tax return

with your SSN. To learn more, go to

IRS.gov/IPPIN.

Ways to check on the status of your refund.

•

Go to IRS.gov/Refunds.

•

Download the official IRS2Go app to your

mobile device to check your refund status.

•

Call the automated refund hotline at

800-829-1954.

The IRS can’t issue refunds before

mid-February for returns that claimed

the EIC or the additional child tax credit

(ACTC). This applies to the entire refund, not

just the portion associated with these credits.

Making a tax payment. Payments of U.S. tax

must be remitted to the IRS in U.S. dollars.

Digital assets are not accepted. Go to IRS.gov/

Payments for information on how to make a pay-

ment 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 Card, Credit Card, or Digital Wallet:

Choose an approved payment processor

to pay online or by phone.

•

Electronic Funds Withdrawal: Schedule a

payment when filing your federal taxes us-

ing tax return 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 in-

structions.

CAUTION

•

Cash: You may be able to pay your taxes

with cash at a participating retail store.

•

Same-Day Wire: You may be able to do

same-day wire from your financial institu-

tion. Contact your financial institution for

availability, cost, and time frames.

Note. The IRS uses the latest encryption

technology to ensure that the electronic pay-

ments you make online, by phone, or from a

mobile device using the IRS2Go app are safe

and secure. Paying electronically is quick, easy,

and faster than mailing in a check or money or-

der.

What if I can’t pay now? Go to IRS.gov/

Payments for more information about your op-

tions.

•

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 imme-

diate notification of whether your agree-

ment has been approved.

•

Use the Offer in Compromise Pre-Qualifier

to see if you can settle your tax debt for

less than the full amount you owe. For

more information on the Offer in Compro-

mise program, go to IRS.gov/OIC.

Filing an amended return. Go to IRS.gov/

Form1040X for information and updates.

Checking the status of your amended re-

turn. Go to IRS.gov/WMAR to track the status

of Form 1040-X amended returns.

It can take up to 3 weeks from the date

you filed your amended return for it to

show up in our system, and processing

it can take up to 16 weeks.

Understanding an IRS notice or letter

you’ve received. Go to IRS.gov/Notices to find

additional information about responding to an

IRS notice or letter.

Responding to an IRS notice or letter. You

can now upload responses to all notices and

letters using the Document Upload Tool. For no-

tices that require additional action, taxpayers

will be redirected appropriately on IRS.gov to

take further action. To learn more about the tool,

go to IRS.gov/Upload.

Note. You can use Schedule LEP (Form

1040), Request for Change in Language Prefer-

ence, to state a preference to receive notices,

letters, or other written communications from

the IRS in an alternative language. You may not

immediately receive written communications in

the requested language. The IRS’s commitment

to LEP taxpayers is part of a multi-year timeline

that began providing translations in 2023. You

will continue to receive communications, includ-

ing notices and letters, in English until they are

translated to your preferred language.

Contacting your local TAC. Keep in mind,

many questions can be answered on IRS.gov

without visiting a TAC. Go to IRS.gov/LetUsHelp

for the topics people ask about most. If you still

need help, TACs provide tax help when a tax is-

CAUTION

sue 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 long wait times. Be-

fore you visit, go to IRS.gov/TACLocator to find

the nearest TAC and to 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 “Lo-

cal Offices.”

The Taxpayer Advocate

Service (TAS) Is Here To

Help You

What Is TAS?

TAS is an independent organization within the

IRS that helps taxpayers and protects taxpayer

rights. TAS strives to ensure that every taxpayer

is treated fairly and that you know and under-

stand your rights under the Taxpayer Bill of

Rights.

How Can You Learn About Your

Taxpayer Rights?

The Taxpayer Bill of Rights describes 10 basic

rights that all taxpayers have when dealing with

the IRS. Go to TaxpayerAdvocate.IRS.gov to

help you understand what these rights mean to

you and how they apply. These are your rights.

Know them. Use them.

What Can TAS Do for You?

TAS can help you resolve problems that you

can’t resolve with the IRS. And their service is

free. If you qualify for their assistance, you will

be assigned to one advocate who will work with

you throughout the process and will do every-

thing 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 im-

mediate 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 TAS?

TAS has offices in every state, the District of

Columbia, and Puerto Rico. To find your advo-

cate’s number:

•

Go to TaxpayerAdvocate.IRS.gov/Contact-

Us;

•

Download Pub. 1546, The Taxpayer Advo-

cate Service Is Your Voice at the IRS, avail-

able at IRS.gov/pub/irs-pdf/p1546.pdf;

•

Call the IRS toll free at 800-TAX-FORM

(800-829-3676) to order a copy of Pub.

1546;

•

Check your local directory; or

•

Call TAS toll free at 877-777-4778.

How Else Does TAS Help

Taxpayers?

TAS works to resolve large-scale problems that

affect many taxpayers. If you know of one of

Page 16 of 18 Fileid: … tions/p936/2023/a/xml/cycle05/source 11:38 - 3-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

16 Publication 936 (2023)

these broad issues, report it to TAS at IRS.gov/

SAMS. Be sure to not include any personal tax-

payer information.

Low Income Taxpayer Clinics

(LITCs)

LITCs are independent from the IRS and TAS.

LITCs represent individuals whose income is

below a certain level and who need to resolve

tax problems with the IRS. LITCs can represent

taxpayers in audits, appeals, and tax collection

disputes before the IRS and in court. In addi-

tion, LITCs can provide information about tax-

payer rights and responsibilities in different lan-

guages for individuals who speak English as a

second language. Services are offered for free

or a small fee. For more information or to find an

LITC near you, go to the LITC page at

TaxpayerAdvocate.IRS.gov/LITC or see IRS

Pub. 4134, Low Income Taxpayer Clinic List, at

IRS.gov/pub/irs-pdf/p4134.pdf.

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.

Index

Acquisition debt 2, 9, 10

Alimony 5

Amortization:

Points 5

Appraisal fees 7

Armed forces:

Housing allowance 5

Assistance (See Tax help)

Average mortgage balance 12

Borrowers:

More than one 8

Seller-paid points, treatment by

buyer 7

Business:

Average mortgage balance, total

amount of interest otherwise

allowable to each activity 13

Mortgage proceeds used for 8

Clergy:

Ministers' and military housing

allowance 5

Cooperative housing 4, 8, 9

Cost of home or

improvements 10

Credits 5

Date of mortgage 10

Debt

Choice to treat as not secured by

home 4

Grandfathered 2, 10

Home acquisition 2, 9

Not secured by home 3

Secured 3

Deductions 2

Home office 4

Points 5, 13

Deed preparation costs 7

Divorced taxpayers 5, 10

Fees:

Appraisal 7

Notaries 7

Points (See Points)

Figures (See Tables and figures)

Form 1040, Schedule A 8, 14

Form 1040, Schedule C or

C-EZ 14

Form 1040, Schedule E 14

Form 1040, Schedule F 14

Form 1098 8

Form 8396 5

Grandfathered debt 2, 10

Ground rents 5

Home 2

Acquisition debt 2, 9

Construction 4

Cost of 10

Destroyed 4

Divided use 4, 10

Grandfathered debt 2, 10

Improvement loan, points 7

Main 4

Office in 4

Qualified 4

Renting out part of 4

Sale of 4

Second 4

Time-sharing arrangements 4

Housing allowance:

Ministers and military 5

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,

Joint returns 4

Lender mortgage statements 12

Limits:

Cooperative housing, mortgage

interest deduction 9

Deductibility of points 8

Home acquisition debt 9

Home mortgage interest

deduction 9

Qualified loan limit 11, 12

Line 10 8

Loans 8, 9

(See also Mortgages)

Home improvement, points 7

Qualified loan limit 11

Main home 4

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

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 12

Date of 10

Ending early 8

Late qualifying 9

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, 12

Refinanced 7, 9, 10

Reverse 5

Statements provided by

lender 12

To buy, build, or improve 9

Wraparound 3

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 7

Funds provided less than 7

General rule 5

Home improvement loans 7

Seller paid 7

Prepaid interest 5, 8

Prepayment penalties 4

Publications (See Tax help)

Qualified homes 4

Qualified loan limit:

Average mortgage balance 12

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

Separate returns 4

Separated taxpayers 5

Share of Interest 9

Spouses 4

Statements provided by

lender 12

Stock:

Cooperative housing 9

Page 17 of 18 Fileid: … tions/p936/2023/a/xml/cycle05/source 11:38 - 3-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Publication 936 (2023) 17

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 help 14

Tax-exempt securities:

Mortgage proceeds invested

in 5

Time-sharing arrangements 4

Worksheets:

Deductible home mortgage

interest 11

Qualified loan limit 11

Wraparound mortgages 3

Page 18 of 18 Fileid: … tions/p936/2023/a/xml/cycle05/source 11:38 - 3-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

18 Publication 936 (2023)