## What is Excess Mortgage Interest?
Excess mortgage interest is the amount of interest on a mortgage that exceeds the deductible limit set by the Internal Revenue Service (IRS). The deductible limit varies depending on the type of mortgage and the taxpayer’s filing status.
For mortgages originated after December 15, 2017, the deductible limit is as follows:
* **Single taxpayers:** Up to $375,000
* **Married couples filing jointly:** Up to $750,000
* **Married couples filing separately:** Up to $375,000 each
For mortgages originated before December 16, 2017, the deductible limit is as follows:
* **Single taxpayers:** Up to $1 million
* **Married couples filing jointly:** Up to $2 million
* **Married couples filing separately:** Up to $1 million each
### How to Calculate Excess Mortgage Interest
To calculate excess mortgage interest, you need to know the following:
* The amount of interest you paid on your mortgage during the year
* The deductible limit for your filing status
Once you have this information, you can subtract the deductible limit from the amount of interest you paid. The difference is your excess mortgage interest.
### Example
Let’s say you are a single taxpayer who paid $12,000 in mortgage interest during the year. The deductible limit for your filing status is $375,000.
To calculate your excess mortgage interest, you would subtract the deductible limit from the amount of interest you paid:
“`
$12,000 – $375,000 = $0
“`
In this example, you would not have any excess mortgage interest.
### Tax Treatment of Excess Mortgage Interest
Excess mortgage interest is not deductible on your federal income tax return. This means that you will not be able to reduce your taxable income by the amount of excess mortgage interest you paid.
However, excess mortgage interest may be subject to the alternative minimum tax (AMT). The AMT is a parallel tax system that is designed to ensure that taxpayers who benefit from certain deductions and credits do not pay too little in taxes.
If you are subject to the AMT, you may be required to add back a portion of your excess mortgage interest to your taxable income. The amount of excess mortgage interest that you must add back depends on your filing status and the amount of your AMT exemption.
### How to Avoid Excess Mortgage Interest
There are a few things you can do to avoid excess mortgage interest:
* **Borrow less money:** The less money you borrow, the less interest you will pay.
* **Get a shorter loan term:** A shorter loan term will mean that you will pay less interest over the life of the loan.
* **Make extra payments:** Making extra payments on your mortgage will help you to pay off the loan faster and reduce the amount of interest you pay.
* **Refinance your mortgage:** If interest rates have fallen since you took out your mortgage, you may be able to refinance to a lower interest rate. This will save you money on interest and help you to avoid excess mortgage interest.
## Conclusion
Excess mortgage interest is the amount of interest on a mortgage that exceeds the deductible limit set by the IRS. Excess mortgage interest is not deductible on your federal income tax return and may be subject to the AMT. There are a few things you can do to avoid excess mortgage interest, such as borrowing less money, getting a shorter loan term, making extra payments, and refinancing your mortgage.