Because mortgage interest payments make up the largest part of loan payments in the early years, this is usually the biggest deduction available to homeowners. Interest secured by a first or second home is deductible up to a maximum of a million dollars of debt. But remember, this is not a blanket amount. It applies only to the amount of the original purchase, plus any capital improvements. Home equity loan interest, limited to $100,000, is also deductible.
Don't forget that the interest on a home improvement loan, while deductible, refers only to capital improvements (major changes like a room addition, a new roof, or making a property usable by people with disabilities) not general upkeep or cosmetic changes.
Interest on repair work is deductible only when you use a home equity loan, and up to the allowable limits.
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