Interest deduction rules

Interest deduction rules determine when you can subtract the interest paid on loans from your taxable income. Generally, interest on loans used for business purposes or to buy, improve, or maintain income-producing property is deductible. However, personal loans, like credit card debt or home mortgages, have specific limits and conditions. For example, mortgage interest is usually deductible up to certain loan amounts and under specific tax rules. The purpose of these rules is to ensure that only interest related to income-generating activities reduces your tax liability, preventing the deduction of personal or non-related interest expenses.