Connect With Us
If you, like most individuals, are a cash-method taxpayer, you ordinarily deduct interest in the year that you pay it. However, if you prepay your mortgage interest, you can't fully deduct the prepaid amount in the year you pay it. Instead, the general rule is that you must deduct the interest in the year to which it applies.
An apparent exception to this rule applies if you make your first payment of the next tax year during the last month of the preceding year (for example, you make your January 1st mortgage payment sometime in December). Mortgage interest is due after the month to which it applies; therefore, your January 1st payment is for interest you owe for the month of December and can be deducted in the earlier year.
Detailed rules apply to: