On Schedule A of Form 1040, you may deduct three types of interest charges:
Premiums paid for mortgage insurance before 2012 on a principal or second residence were deductible within limits, but the deduction will not be allowed for 2012 unless Congress extends the law authorizing the deduction(15.6).
Interest on personal loans (such as loans to buy autos and other personal items and credit card finance charges) is not deductible with the exception of qualifying student loan interest; see Chapter 33.
Interest on loans for business purposes is fully deductible on Schedule C. Interest on loans related to rental property is fully deductible from rental income on Schedule E. Whether interest is a business, investment, or a personal expense generally depends upon the use made of the money borrowed, not on the kind of property used to secure the loan. However, interest on a loan secured by a first or second home may be deductible as home equity mortgage interest regardless of the way you use the loan.
Interest on a loan used to finance an investment in a passive activity is subject to the limitations discussed in Chapter 10. However, if you rent out a second home that qualifies as a second residence, the portion of mortgage interest allocable to rental use is deductible as qualified mortgage interest and is not treated as a passive activity expense.
15.6 Mortgage Insurance Premiums and Other Payment Rules
15.7 Interest on Refinanced Loans
15.9 Cooperative and Condominium Apartments
15.10 Investment Interest Limitations
15.11 Debts To Carry Tax-Exempt Obligations
15.12 Earmarking Use of Loan Proceeds For Investment or Business
18.188.215.1