Calculating Excess Mortgage Interest for Home Office Deduction

This is actually a common point of confusion! The excess mortgage interest question relates to the business portion of your mortgage interest, which is a separate calculation from your personal tax deduction decision. Even though you're taking the standard deduction for your personal taxes (which is the right move when it's higher than your itemized deductions would be), you can still deduct the business portion of mortgage interest as a business expense on Schedule C. This is completely separate from the itemizing vs. standard deduction decision. For your husband's photography business home office, you'll need to calculate what percentage of your home is used exclusively for business (typically square footage of the office divided by total square footage of home). Let's say it's 10% - then 10% of your mortgage interest can be considered a business expense. The "excess" part usually refers to interest on mortgage debt exceeding $750,000, but since your mortgage is about $385,000, you likely don't have excess mortgage interest to worry about.

I was in a similar situation last year with my consulting business and home office deduction questions. The mortgage interest part was confusing until I found taxr.ai (https://taxr.ai) which helped me understand exactly how to handle these deductions properly. I uploaded my mortgage statement and answered a few questions about my home office, and it gave me a clear breakdown of what qualified as a business expense for my Schedule C versus personal deductions. Saved me from making a costly mistake - I was actually under-deducting my legitimate business expenses because I was confused about the standard deduction vs. business expense rules!

Just wanted to update that I tried taxr.ai after reading about it here. Super helpful for my therapy practice! It clarified exactly how to handle my mortgage interest allocation for my basement office. I was actually doing it wrong before - I was only counting direct expenses and not the proportional share of mortgage interest and property taxes for my business space. The documentation it provided gave me confidence I'm doing it right, and I was able to properly deduct about $3,800 more in legitimate business expenses than I would have otherwise. Definitely recommend if you're confused about home office deductions!

For anyone struggling with these tax questions, I highly recommend using Claimyr (https://claimyr.com) to actually speak with an IRS agent directly. I had so many questions about home office deductions and mortgage interest that weren't getting resolved through forums or tax software. I was super skeptical about getting through to the IRS (we all know those hold times are ridiculous), but Claimyr got me connected to an IRS agent in about 15 minutes instead of the 3+ hours I spent last time I tried calling myself. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent walked me through exactly how to handle my mortgage interest allocation for my home business and confirmed I was calculating it correctly. Gave me total peace of mind that I wasn't making a mistake that would come back to haunt me later.

I've gotta eat my words here. After posting my skeptical comment above, I decided to try Claimyr myself because I was totally stuck on some home office deduction questions similar to the original poster. I was 100% convinced it wouldn't work, but I got connected to an IRS agent in about 20 minutes (compared to my previous attempts that never even got through). The agent actually was incredibly helpful and walked me through exactly how to handle the business portion of my mortgage interest and property taxes. They explained that it's completely separate from the standard deduction vs. itemizing decision, which was my main confusion. This service legitimately saved me hours of frustration and potentially a lot of money. Sorry for doubting - sometimes good things actually do exist!

Random tip that helped me: keep really good documentation of your home office measurements and calculations. I got audited 2 years ago specifically on my home office deduction and having photos, a floor plan with measurements, and my calculation method documented saved me big time. The IRS is particularly picky about the "exclusive use" requirement for home offices. If your husband uses that space exclusively for his photography business and not for personal purposes at all, you're good. But if it's a multi-purpose room, you could have issues.

anyone know if turbo tax automatically calculates the business percentage of mortgage interest once you enter your home office percentage? or do i need to do that math separately and enter it manually?

Great question! I ran into this exact same issue last year. The "excess mortgage interest" term in TurboTax is really misleading - it mainly applies to mortgages over $750,000, so you shouldn't have to worry about it with your $385,000 mortgage. What you DO want to make sure you're capturing is the business portion of your mortgage interest for the home office deduction. This is completely separate from your decision to take the standard deduction. You can take the standard deduction for your personal taxes AND still deduct the business portion of mortgage interest on Schedule C. So if your home office is, say, 15% of your home's square footage, then 15% of that $18,000 annual mortgage interest ($2,700) would be deductible as a business expense for your husband's photography business. Just make sure the office space is used exclusively for business - that's the key requirement the IRS looks for. The beauty is this reduces your business income dollar-for-dollar, which can save you more in taxes than if it were just part of itemized deductions. Don't leave money on the table!