IRS Acquiesces to Per-individual Interpretation of Mortgage Interest Deduction Limits

Posted by Kim Chen on September 13th, 2016

The IRS has announced that it will follow the Ninth Circuit’s decision in Voss (116 AFTR 2d 2015-5529) that the Section 163(h)(3) qualified residence interest limitations ($1 million of acquisition indebtedness and $100,000 of home equity indebtedness) are applied on a per-individual basis, and not a per-residence basis. Under this interpretation, unmarried co-owners are collectively limited to a deduction for interest paid on a maximum of $2.2 million, rather than $1.1 million, of acquisition and home equity indebtedness. Actions Relating to Decisions of the Tax Court-Acquiescence to Voss (IRB 2016-31, p. 193).