Interest is an amount you pay for the use of borrowed money. To deduct interest you paid on a debt on your tax return you must be legally liable for the debt and you must be able to itemize your tax deductions on your tax return.
Interest-tax deductions fall into five major categories: Home-mortgage interest. Home-mortgage interest is interest you pay on a loan secured by your main home and/or a second home. Your main home is where you live most of the time. It can be a house, cooperative apartment, condominium, mobile home, house trailer or houseboat that has sleeping, cooking and toilet facilities.