Interest You Paid

The rules for deducting interest vary, depending on whether the loan proceeds are used for business, personal, or investment activities. See Instructions for Form 8990 for more information about deducting business interest expenses. See Pub. 550 for more information about deducting investment interest expenses. You can't deduct personal interest. However, you can deduct qualified home mortgage interest (on your Schedule A) and interest on certain student loans (on Schedule 1 (Form 1040), line 21), as explained in Pub. 936 and Pub. 970.

If you use the proceeds of a loan for more than one purpose (for example, personal and business), you must allocate the interest on the loan to each use.

You allocate interest on a loan in the same way as the loan is allocated. You do this by tracing disbursements of the debt proceeds to specific uses. For more information on allocating mortgage interest, see Pub. 936.

In general, if you paid interest in 2025 that applies to any period after 2025, you can deduct only amounts that apply for 2025.

Use Schedule A to deduct qualified home mortgage interest and investment interest.