Bill has a mortgage loan on his personal residence. He decides to pay 18 months of interest in advance on October 1, 2015. The total advanced interest payment is $36,000. How much of the advance interest payment can he deduct in 2015?

Question

Quizplus · Accepted Answer

Taxpayers may typically deduct mortgage interest in the year it is paid. Since Bill paid 18 months of interest in advance, only the portion of the payment allocable to 2015 (i.e. the first six months) may be deducted in 2015. Therefore, Bill can deduct $6,000 ($36,000/18 months x 6 months) of the advance interest payment in 2015.

Bill Has a Mortgage Loan on His Personal Residence