For interest to be deducible, a loan must be secured by the personal residence or other qualified residence. Otherwise, assuming the loan or note is connected to the divorce or settlement agreement, it will be personal interest. The Service states that a interest expenses for a second home will be considered qualified residence interest but you can have only one second home and one main home. Thus interest incurred on the family residence mortgage after the divorce should be deductible in most circumstances.

SOURCE: DivorceSource