What This Notice Means
The CP28A notice is about the home mortgage interest deduction you claimed on Schedule A of your Form 1040 for the year shown on the notice. IRS records show the amount you claimed is more than the limit. The notice is there to tell you about the issue and help you verify your deduction.
Two things limit this deduction: how much mortgage debt you have, and when the mortgage originated.
What to Do
- Pull your return for the year on the notice and review Schedule A.
- Recalculate the deductible interest using the limits below.
- If the deduction was wrong, file an amended return. You can amend electronically if you filed electronically.
- Give a copy of the notice to anyone who prepared your return.
- Check eligibility before claiming the deduction on future returns.
Leaving an incorrect deduction unaddressed could lead to additional IRS action.
The Dollar Limit
For mortgage debt incurred on or after December 16, 2017, interest is deductible on up to $750,000 of debt ($375,000 if married filing separately). Interest on debt above the limit isn't deductible. Older loans and other special rules can change the math. Publication 936 includes a worksheet for figuring your qualified loan limit and deductible interest.
Main Home and Second Home
The deduction covers mortgages on your main home and one qualified second home. Your main home is where you ordinarily live most of the time. If you have more than one second home, only one counts.
A second home you rent out part of the year only qualifies if you use it yourself for more than 14 days or 10% of the rental days, whichever is longer.
A Common Mistake
The limit applies to all your qualifying mortgage debt combined. A $250,000 mortgage on a main home and a $700,000 mortgage on a second home total $950,000. Interest is deductible only on $750,000 of it.
If you received a CP28A notice and need to sort out your mortgage interest deduction, call us at (813) 229-7100.