Is mortgage interest on a home office deductible?

What the publication says

Publication 936 deals with a home office in two short passages, and between them they give the whole framework. Under Divided use of your home, the only part of your home considered a qualified home is the part you use for residential living. If you use part of your home for other than residential living, such as a home office, you must allocate the use of your home, dividing both the cost and the fair market value of your home between the part that is a qualified home and the part that is not. Under Office in home, if you have an office you use in your business, you are sent to Publication 587, Business Use of Your Home, which explains how to figure the deduction for business use of your home, including the business part of your home mortgage interest.

That covers what the IRS puts in this publication. The details of qualifying a space as a business office live in Publication 587. Read them before claiming a home office.

Why the allocation uses cost and value

The publication tells you to divide cost and fair market value, not just square footage. Cost matters because home acquisition debt is limited to the cost of your home plus any improvements. If a share of the home is not a qualified home, that share of the cost drops out of the base, which can reduce the amount that qualifies as home acquisition debt. Fair market value matters for the same reason when the allocation is tested. In many homes the percentage of floor area used for business is a reasonable proxy for the share, but the publication’s wording is cost and value, and you should keep a record of how you split it.

An illustration

This example is not from the publication. Suppose 15% of a home is used for business, and total mortgage interest is $12,000. The residential share is 85%, so $10,200 is attributable to the qualified home and $1,800 to the business part. The $10,200 is the amount you would consider for Schedule A, subject to the debt limits. The $1,800 is not personal mortgage interest and belongs in the business-use-of-home computation. The calculator above does this arithmetic with the percentage you enter.

Where each piece is reported

Home mortgage interest on the residential portion that you can deduct goes on Schedule A (Form 1040), line 8a if reported on Form 1098, or line 8b if not. The business portion does not go on Schedule A; you follow the business-use-of-home instructions. If your home mortgage interest deduction is limited under Part II and you used mortgage proceeds for business, Table 2 in Pub. 936 shows where the excess is deducted. Consult a tax professional if your office is a significant share of the home.

Does the standard deduction matter?

If you do not itemize, there is no Schedule A mortgage interest deduction to take for the residential part. Whether the business-use deduction is available depends on how you earn income and on the rules in Publication 587, not on this publication. The simplified home office deduction calculator covers the simplified alternative. Compare the totals with the whether itemizing beats the standard deduction before deciding how to claim.

Renting part of the home is different

Renting a room is not the same as using a room for an office. You can treat a rented part as used by you for residential living only if the tenant uses it primarily for residential living, it is not a self-contained unit with separate sleeping, cooking and toilet facilities, and you do not rent to more than two tenants at any time in the year. The qualified home page covers these conditions.

Interest above the limit

If your mortgage is over the limits, the interest above the cap is not home mortgage interest, and Publication 936 lets you allocate it to a business activity if the mortgage proceeds were used for that business. The allocation example in the publication divides the interest by the share of balances used for each purpose. That is about the use of the loan proceeds, and not the use of the space in the house. Both questions can arise on the same return. See the acquisition debt page and the mortgage interest deduction calculator.

Sources

• IRS Publication 936, Home Mortgage Interest Deduction (2025): “Divided use of your home” and “Office in home”, plus the Reminders, Table 1 and Table 2. Read November 2, 2026.

Edition read: Publication 936 (2025), for use in preparing 2025 returns. Dollar limits in this publication are for 2025; the publication notes that tax legislation enacted July 4, 2025 (P.L. 119-21) may affect federal deductions, so check IRS.gov/Pub936 and the Schedule A instructions for your tax year. This page summarizes the publication and does not replace it. Marked for human review.