Acquisition indebtedness

Acquisition indebtedness is debt incurred in acquiring, building, or substantially improving a qualified residence that the taxpayer owns.It defines what most people callĀ home mortgage debt, on which the interest is deductible because the interest on such loans is deductible as qualified residence interest. Remember the limits because interest on such debt is deductible only on the portion of the indebtedness that does not exceed $1,000,000 ($500,000 for married persons filing separate returns). Further, the taxpayer must itemize deductions in order to take advantage of acquisition indebtedness