What This Notice Means
You claimed the home mortgage interest deduction on Schedule A of your Form 1040 for the year listed on the notice. IRS records show the interest you claimed is more than the limit. The notice is meant to alert you and give you a chance to verify the deduction.
The deduction is limited by the size of your mortgage debt and the date the mortgage was taken out.
What to Do
- Review Schedule A on your return for the year on the notice.
- Verify the amount of mortgage interest you deducted.
- If you claimed it incorrectly, file an amended return. If you filed electronically, you can amend electronically.
- Share the notice with anyone who helped prepare your return.
- Check future returns before claiming the deduction.
If you ignore incorrect information, the IRS may take additional action.
How the Limit Works
For mortgages taken out on or after December 16, 2017, you can deduct interest on up to $750,000 of mortgage debt, or $375,000 if married filing separately. If your debt is above the limit, only the interest on debt up to the limit is deductible. Other limitations may apply. Publication 936 has the full rules and a worksheet for figuring the deductible amount.
Which Homes Count
You can deduct interest on up to two homes: your main home and one second home. A qualified home can be a house, condominium, cooperative, mobile home, house trailer, boat, or similar property with sleeping, cooking, and toilet facilities.
If you rent out the second home part of the year, you must also use it yourself for more than 14 days or 10% of the days it was rented, whichever is longer. Otherwise it's rental property, not a second home.
The limit applies to your combined mortgages. Two loans that are each under $750,000 can still exceed the limit together.
If you received a CP28 notice and aren't sure your mortgage interest deduction was right, call us at (813) 229-7100.