Publication 936, Mortgage Interest Deduction. Introductory Material
The 3 groups are the following.
Mortgages you took down (called grandfathered debt).
Mortgages you (or your better half if hitched filing a return that is joint took down (see binding agreement exception below), to purchase, build, or considerably enhance your house (called home acquisition financial obligation), but as long as throughout these mortgages plus any grandfathered debt totaled $1 million or less ($500,000 or less if hitched filing individually).
Exception. A taxpayer whom gets in into a written binding agreement, to close in the purchase of a major residence, and whom acquisitions such residence, is known as to possess incurred the house purchase financial obligation prior.
Mortgages you (or your partner if married filing a return that is joint took down, to purchase, build, or significantly enhance your house (called house acquisition financial obligation), but only when throughout these mortgages plus any grandfathered debt totaled $750,000 or less ($375,000 or less if hitched filing individually).
The buck restrictions for the next and third categories apply to the combined mortgages in your primary house and 2nd house.
See role II for lots more detailed definitions of grandfathered home and debt purchase financial obligation.
You can make use of Figure a to check on whether your property home loan interest is completely deductible.