SALT & Mortgage Interest: SALT & Mortgage Interest Deductions
Quick answer
Itemizers can deduct state and local income or sales taxes plus property taxes, but only up to the statutory SALT cap in IRC Section 164. Mortgage interest is deductible on acquisition debt used to buy, build, or substantially improve a qualified home, up to a debt limit, under Section 163(h).
SALT & Mortgage Interest Deductions is tested on EA Exam Part 1 (Deductions & Credits). Primary IRS reference: IRS Publication 530.
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About this EA exam topic
State-and-local tax (SALT) and mortgage-interest deductions are itemized-deduction topics the EA exam tests for limits and qualification. You will apply the SALT deduction cap and decide which taxes count toward it.
Mortgage-interest questions test acquisition debt versus home-equity debt, the debt-limit ceiling on deductible interest, and points. Expect fact patterns that mix a refinance, a second home, or equity debt used for non-home purposes.
What you'll be tested on
- The SALT deduction cap and which taxes are included
- Acquisition debt vs. home-equity debt and the deductible-interest limit
- Treatment of points paid on a purchase vs. a refinance
- When itemizing beats the standard deduction
How to prepare
- Know exactly which taxes count toward the SALT cap.
- Separate acquisition debt from equity debt. The deductibility hinges on how proceeds were used.
- Compare total itemized deductions against the standard deduction in every scenario.
Practice questions for SALT & Mortgage Interest Deductions
What this topic covers
SALT & Mortgage Interest Deductions appears in Part 1: Individual Taxation within the Deductions & Credits domain. VantageEA practice questions focus on how salt & mortgage interest rules are applied in realistic EA exam fact patterns.
What candidates practice
Candidates practice identifying tested facts, choosing the best multiple-choice answer, and reviewing explanations tied to IRS Publication 530, IRC §164, IRC §163(h). This topic supports timed 100-question PSI-style mock tests and shorter topic review sessions.
Related practice-question themes include salt, state-local-tax, mortgage-interest, itemized-deductions.
Topic overview
Official IRS sources
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Frequently asked questions
Is the SALT deduction limited?
Yes, total state-and-local taxes are deductible only up to the current statutory cap when itemizing.
Which part tests this?
Part 1 (Individuals), within itemized deductions.
Reference?
IRS Publications 936 (home mortgage interest) and 17 (general individual rules).
Continue studying
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