Legal Definitions - qualified residence interest

A qualified residence interest is a type of interest that allows taxpayers to deduct the interest paid on a mortgage used to buy, build, or improve their primary or secondary residence. This deduction is subject to certain limitations and conditions.

For example, if a taxpayer takes out a mortgage to buy a home, the interest paid on that mortgage may be considered a qualified residence interest and may be deductible on their tax return. However, if the taxpayer uses the mortgage to buy a vacation home, the interest may not be deductible as qualified residence interest.

Another example is if a taxpayer takes out a home equity loan to make improvements to their primary or secondary residence, the interest paid on that loan may be considered qualified residence interest and may be deductible on their tax return.

These examples illustrate how qualified residence interest is a specific type of interest that is related to homeownership and can have tax implications for taxpayers.