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Author: lstokes1 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121258  
Subject: Mortgage Interest Deduction Date: 3/13/2001 5:49 PM
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I know you can only deduct mortgage interest on principle of $1,000,000. How do you calculate the interest that is deductible when the principle was over $1,000,000 at beginning of year and goes below it by the end of the year.

Linda
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Author: kktice Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 48336 of 121258
Subject: Re: Mortgage Interest Deduction Date: 3/13/2001 6:28 PM
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I would suggest that with a mortgage in excess of a million dollars, you should probably be able to pay a competent tax professional to determine the deductible amount correctly

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Author: BostonCPA Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 48338 of 121258
Subject: Re: Mortgage Interest Deduction Date: 3/13/2001 6:33 PM
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<< I know you can only deduct mortgage interest on principle of $1,000,000. How do you calculate the interest that is deductible when the principle was over $1,000,000 at beginning of year and goes below it by the end of the year. >>

You could allocate the deduction based on the amount of the principal balance and how long it was outstanding. That would be the hard way.

I would do the following:

Take the principal balance at the beginning of the year and add it to the principal balance at the end of the year. Divide this result by two to give you the average principal balance for the year. From this result, subtract $1,000,000. If the result is zero or less, then deduct all of your mortgage interest for the year. If the result is greater than zero, divide $1,000,000 into the average principal balance for the year. Take this % and multiply it by your total interest expense for the year and this would be your interest deduction.


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Author: BostonCPA Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 48339 of 121258
Subject: Re: Mortgage Interest Deduction Date: 3/13/2001 6:37 PM
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Of course if you paid down the mortgage to under $1,000,000 near the beginning of the year, then use a weighted average to figure the average principal balance outstanding for the year.

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