taxmap/pubs/p530-000.htm#en_us_publink100011826taxmap/pubs/p530-000.htm#en_us_publink1000246370Basis of inherited property.(p1)
The rules used in determining basis in property you inherited
from someone who died in 2010 have changed. See
Inheritance, later under
Basis.
taxmap/pubs/p530-000.htm#en_us_publink1000253327Itemized deductions phaseout ended.(p1)
For 2010, taxpayers with adjusted gross income above a certain
amount will no longer lose part of their deduction for itemized deductions.
taxmap/pubs/p530-000.htm#en_us_publink1000252489Expiration of increased standard deduction for real estate taxes.(p1)
The increased standard deduction for real estate taxes has expired
and is not available for 2010 or later years.
taxmap/pubs/p530-000.htm#en_us_publink1000246364Home Affordable Modification Program (HAMP).(p1)
If you benefit from Pay-for-Performance Success Payments, the
payments are not taxable under HAMP.
taxmap/pubs/p530-000.htm#en_us_publink1000190409Mortgage debt forgiveness.(p1)
You can exclude from gross income any discharges of qualified
principal residence indebtedness made after 2006 and before 2013. You must
reduce the basis of your principal residence (but not below zero) by the amount
you exclude. See
Discharges of qualified principal residence indebtedness,
later, and Form 982, Reduction of Tax Attributes Due to Discharge of
Indebtedness (and Section 1082 Basis Adjustment),for more information.
taxmap/pubs/p530-000.htm#en_us_publink1000252572Repayment of first-time homebuyer credit.(p1)
You generally must repay any credit you claimed for a home you
bought if you disposed of the home or it ceased to be your main home in 2010. If
you bought the home in 2008 and you owned and used it as your main home for all
of 2010, you generally must begin repaying the credit with your 2010 tax return.
See Form 5405 and its instructions for details.
taxmap/pubs/p530-000.htm#en_us_publink100011830Photographs of missing children.(p2)
The Internal Revenue Service is a proud partner with the National
Center for Missing and Exploited Children. Photographs of missing children
selected by the Center may appear in this publication on pages that would
otherwise be blank. You can help bring these children home by looking at the
photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a
child.
This publication provides tax information for homeowners. Your
home may be a house, condominium, cooperative apartment, mobile home, houseboat,
or house trailer.
The following topics are explained.
- How you treat items such as settlement and closing costs,
real estate taxes, sales taxes, home mortgage interest, and repairs.
- What you can and cannot deduct on your tax return.
- The first-time homebuyer credit.
- The tax credit you can claim if you received a mortgage credit
certificate when you bought your home.
- Why you should keep track of adjustments to the basis of your
home. (Your home's basis generally is what it cost; adjustments include the cost
of any improvements you might make.)
- What records you should keep as proof of the basis and adjusted
basis.
We welcome your comments about this publication and your suggestions
for future editions.
You can write to us at the following address:
Internal Revenue Service
Individual Forms and Publications Branch
SE:W:CAR:MP:T:I
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224
We respond to many letters by telephone. Therefore, it would
be helpful if you would include your daytime phone number, including the area
code, in your correspondence.
You can email us at
*taxforms@irs.gov. (The asterisk must be included in the address.) Please put
"Publications Comment" on the subject line. You can also send us comments from
www.irs.gov/formspubs/, select "Comment on Tax Forms and Publications" under "Information
about."
Although we cannot respond individually to each comment received,
we do appreciate your feedback and will consider your comments as we revise our
tax products.
taxmap/pubs/p530-000.htm#en_us_publink1000252834Visit
www.irs.gov/formspubs/
to download forms and publications, call 1-800-829-3676, or write to the address
below and receive a response within 10 days after your request is received.
Internal Revenue Service
1201 N. Mitsubishi Motorway
Bloomington, IL 61705-6613If you have a tax question, check the information available on
IRS.gov or call 1-800-829-1040. We cannot answer tax questions sent to either of
the above addresses.
taxmap/pubs/p530-000.htm#TXMP42f9e4d5Useful items
You may want to see:
Publication 523 Selling Your Home 527 Residential Rental Property 547 Casualties, Disasters, and Thefts 551 Basis of Assets 555 Community Property 587 Business Use of Your Home 936 Home Mortgage Interest Deduction Form (and Instructions) 5405:
First-Time Homebuyer Credit and Repayment of the Credit 8396:
Mortgage Interest Credit See
How To Get Tax Help,
near the end of this publication, for information about getting
publications and forms.
taxmap/pubs/p530-000.htm#en_us_publink100011834To deduct expenses of owning a home, you must file Form 1040
and itemize your deductions on Schedule A (Form 1040). If you itemize, you
cannot take the standard deduction.
This section explains what expenses you can deduct as a homeowner.
It also points out expenses that you cannot deduct. There are four primary
discussions: real estate taxes, sales taxes, home mortgage interest, and
mortgage insurance premiums. Generally, your real estate taxes, home mortgage
interest, and mortgage insurance premiums are included in your house payment.
taxmap/pubs/p530-000.htm#en_us_publink100011835If you took out a mortgage (loan) to finance the purchase of
your home, you probably have to make monthly house payments. Your house payment
may include several costs of owning a home. The only costs you can deduct are
real estate taxes actually paid to the taxing authority, interest that qualifies
as home mortgage interest, and mortgage insurance premiums. These are discussed
in more detail later.
Some nondeductible expenses that may be included in your house
payment include:
- Fire or homeowner's insurance premiums, and
- The amount applied to reduce the principal of the mortgage.
If you are a minister or a member of the uniformed services and
receive a housing allowance that is not taxable, you still can deduct your real
estate taxes and your home mortgage interest. You do not have to reduce your
deductions by your nontaxable allowance.
taxmap/pubs/p530-000.htm#en_us_publink100011837You cannot deduct any of the following items.
- Insurance (other than mortgage insurance premiums), including
fire and comprehensive coverage, and title insurance.
- Wages you pay for domestic help.
- Depreciation.
- The cost of utilities, such as gas, electricity, or water.
- Most settlement costs. See
Settlement or closing costs
under
Cost as Basis, later, for more information.
- Forfeited deposits, down payments, or earnest money.
Most state and local governments charge an annual tax on the
value of real property. This is called a real estate tax. You can deduct the tax
if it is based on the assessed value of the real property and the taxing
authority charges a uniform rate on all property in its jurisdiction. The tax
must be for the welfare of the general public and not be a payment for a special
privilege granted or service rendered to you.
taxmap/pubs/p530-000.htm#en_us_publink100011839You can deduct real estate taxes imposed on you. You must have
paid them either at settlement or closing, or to a taxing authority (either
directly or through an escrow account) during the year. If you own a cooperative
apartment, see
Special Rules for Cooperatives,
later.
taxmap/pubs/p530-000.htm#en_us_publink100011840Enter the amount of your deductible real estate taxes on Schedule
A (Form 1040), line 6.
taxmap/pubs/p530-000.htm#en_us_publink100011841Real estate taxes are generally divided so that you and the seller
each pay taxes for the part of the property tax year you owned the home. Your
share of these taxes is fully deductible if you itemize your deductions.
taxmap/pubs/p530-000.htm#en_us_publink100011842For federal income tax purposes, the seller is treated as paying
the property taxes up to, but not including, the date of sale. You (the buyer)
are treated as paying the taxes beginning with the date of sale. This applies
regardless of the lien dates under local law. Generally, this information is
included on the settlement statement you get at closing.
You and the seller each are considered to have paid your own
share of the taxes, even if one or the other paid the entire amount. You each
can deduct your own share, if you itemize deductions, for the year the property
is sold.
taxmap/pubs/p530-000.htm#en_us_publink100011843You bought your home on September 1. The property tax year (the
period to which the tax relates) in your area is the calendar year. The tax for
the year was $730 and was due and paid by the seller on August 15.
You owned your new home during the property tax year for 122
days (September 1 to December 31, including your date of purchase). You figure
your deduction for real estate taxes on your home as follows.
| 1. | Enter the total real estate taxes for the real property tax
year | $730 |
| 2. | Enter the number of days in the property tax year that you
owned the property | 122 |
| 3. | Divide line 2 by 365 | .3342 |
| 4. | Multiply line 1 by line 3. This is your deduction. Enter
it on Schedule A (Form 1040), line 6 | $244 |
You can deduct $244 on your return for the year if you itemize
your deductions. You are considered to have paid this amount and can deduct it
on your return even if, under the contract, you did not have to reimburse the
seller.
taxmap/pubs/p530-000.htm#en_us_publink100011844Delinquent taxes are unpaid taxes that were imposed on the seller
for an earlier tax year. If you agree to pay delinquent taxes when you buy your
home, you cannot deduct them. You treat them as part of the cost of your home.
See
Real estate taxes,
later, under
Basis.
taxmap/pubs/p530-000.htm#en_us_publink100011845Many monthly house payments include an amount placed in escrow
(put in the care of a third party) for real estate taxes. You may not be able to
deduct the total you pay into the escrow account. You can deduct only the real
estate taxes that the lender actually paid from escrow to the taxing authority.
Your real estate tax bill will show this amount.
taxmap/pubs/p530-000.htm#en_us_publink100011846If you receive a refund or rebate of real estate taxes this year
for amounts you paid this year, you must reduce your real estate tax deduction
by the amount refunded to you. If the refund or rebate was for real estate taxes
paid for a prior year, you may have to include some or all of the refund in your
income. For more information, see
Recoveries
in Publication 525, Taxable and Nontaxable Income.
taxmap/pubs/p530-000.htm#en_us_publink100011847The following items are not deductible as real estate taxes.
taxmap/pubs/p530-000.htm#en_us_publink100011848An itemized charge for services to specific property or people
is not a tax, even if the charge is paid to the taxing authority. You cannot
deduct the charge as a real estate tax if it is:
- A unit fee for the delivery of a service (such as a $5 fee
charged for every 1,000 gallons of water you use),
- A periodic charge for a residential service (such as a $20
per month or $240 annual fee charged for trash collection), or
- A flat fee charged for a single service provided by your local
government (such as a $30 charge for mowing your lawn because it had grown
higher than permitted under a local ordinance).
 | You must look at your real estate tax bill to decide if any
nondeductible itemized charges, such as those listed above, are included in the
bill. If your taxing authority (or lender) does not furnish you a copy of your
real estate tax bill, ask for it. Contact the taxing authority if you need
additional information about a specific charge on your real estate tax bill. |
taxmap/pubs/p530-000.htm#en_us_publink100011850You cannot deduct amounts you pay for local benefits that tend
to increase the value of your property. Local benefits include the construction
of streets, sidewalks, or water and sewer systems. You must add these amounts to
the basis of your property.
You can, however, deduct assessments (or taxes) for local benefits
if they are for maintenance, repair, or interest charges related to those
benefits. An example is a charge to repair an existing sidewalk and any interest
included in that charge.
If only a part of the assessment is for maintenance, repair,
or interest charges, you must be able to show the amount of that part to claim
the deduction. If you cannot show what part of the assessment is for
maintenance, repair, or interest charges, you cannot deduct any of it.
An assessment for a local benefit may be listed as an item in
your real estate tax bill. If so, use the rules in this section to find how much
of it, if any, you can deduct.
taxmap/pubs/p530-000.htm#en_us_publink100011851You cannot deduct transfer taxes and similar taxes and charges
on the sale of a personal home. If you are the buyer and you pay them, include
them in the cost basis of the property. If you are the seller and you pay them,
they are expenses of the sale and reduce the amount realized on the sale.
taxmap/pubs/p530-000.htm#en_us_publink100011852You cannot deduct these assessments because the homeowners association,
rather than a state or local government, imposes them.
taxmap/pubs/p530-000.htm#en_us_publink100011853If you own a cooperative apartment, some special rules apply
to you, though you generally receive the same tax treatment as other homeowners.
As an owner of a cooperative apartment, you own shares of stock in a corporation
that owns or leases housing facilities. You can deduct your share of the
corporation's deductible real estate taxes if the cooperative housing
corporation meets the following conditions:
- The corporation has only one class of stock outstanding,
- Each stockholder, solely because of ownership of the stock,
can live in a house, apartment, or house trailer owned or leased by the
corporation,
- No stockholder can receive any distribution out of capital,
except on a partial or complete liquidation of the corporation, and
- At least one of the following:
- At least 80% of the corporation's gross income for the tax
year was paid by the tenant-stockholders. For this purpose, gross income means
all income received during the entire tax year, including any received before
the corporation changed to cooperative ownership.
- At least 80% of the total square footage of the corporation's
property must be available for use by the tenant-stockholders during the entire
tax year.
- At least 90% of the expenditures paid or incurred by the
corporation were used for the acquisition, construction, management,
maintenance, or care of the property for the benefit of the tenant-shareholders
during the entire tax year.
A tenant-stockholder can be any entity (such as a corporation,
trust, estate, partnership, or association) as well as an individual. The
tenant-stockholder does not have to live in any of the cooperative's dwelling
units. The units that the tenant-stockholder has the right to occupy can be
rented to others.
taxmap/pubs/p530-000.htm#en_us_publink100011855You figure your share of real estate taxes in the following way.
- Divide the number of your shares of stock by the total number
of shares outstanding, including any shares held by the corporation.
- Multiply the corporation's deductible real estate taxes by
the number you figured in (1). This is your share of the real estate taxes.
Generally, the corporation will tell you your share of its real
estate tax. This is the amount you can deduct if it reasonably reflects the cost
of real estate taxes for your dwelling unit.
taxmap/pubs/p530-000.htm#en_us_publink100011856If the corporation receives a refund of real estate taxes it
paid in an earlier year, it must reduce the amount of real estate taxes paid
this year when it allocates the tax expense to you. Your deduction for real
estate taxes the corporation paid this year is reduced by your share of the
refund the corporation received.
taxmap/pubs/p530-000.htm#en_us_publink1000255155Generally, you can elect to deduct state and local general sales
taxes instead of state and local income taxes as an itemized deduction on
Schedule A (Form 1040). Deductible sales taxes may include sales taxes paid on
your home (including mobile and prefabricated), or home building materials if
the tax rate was the same as the general sales tax rate. For information on
figuring your deduction, see the Instructions for Schedule A (Form 1040).
| If you elect to deduct the sales taxes paid on your home,
or home building materials, you cannot include them as part of your cost basis
in the home. |
taxmap/pubs/p530-000.htm#en_us_publink100011857This section of the publication gives you basic information about
home mortgage interest, including information on interest paid at settlement,
points, and Form 1098, Mortgage Interest Statement.
Most home buyers take out a mortgage (loan) to buy their home.
They then make monthly payments to either the mortgage holder or someone
collecting the payments for the mortgage holder.
Usually, you can deduct the entire part of your payment that
is for mortgage interest, if you itemize your deductions on Schedule A (Form
1040). However, your deduction may be limited if:
- Your total mortgage balance is more than $1 million ($500,000
if married filing separately), or
- You took out a mortgage for reasons other than to buy, build,
or improve your home.
If either of these situations applies to you, you will need
to get Publication 936. You also may need Publication 936 if you later refinance
your mortgage or buy a second home.
If you receive a refund of home mortgage interest that you deducted
in an earlier year and that reduced your tax, you generally must include the
refund in income in the year you receive it. For more information, see
Recoveries
in Publication 525. The amount of the refund will usually be
shown on the mortgage interest statement you receive from your mortgage lender.
See
Mortgage Interest Statement,
later.
taxmap/pubs/p530-000.htm#en_us_publink100011859To be deductible, the interest you pay must be on a loan secured
by your main home or a second home. The loan can be a first or second mortgage,
a home improvement loan, or a home equity loan.
taxmap/pubs/p530-000.htm#en_us_publink100011860If you pay interest in advance for a period that goes beyond
the end of the tax year, you must spread this interest over the tax years to
which it applies. Generally, you can deduct in each year only the interest that
qualifies as home mortgage interest for that year. An exception applies to
points, which are discussed later.
taxmap/pubs/p530-000.htm#en_us_publink100011861You can deduct as home mortgage interest a late payment charge
if it was not for a specific service in connection with your mortgage loan.
taxmap/pubs/p530-000.htm#en_us_publink100011862If you pay off your home mortgage early, you may have to pay
a penalty. You can deduct that penalty as home mortgage interest provided the
penalty is not for a specific service performed or cost incurred in connection
with your mortgage loan.
taxmap/pubs/p530-000.htm#en_us_publink100011863In some states (such as Maryland), you may buy your home subject
to a ground rent. A ground rent is an obligation you assume to pay a fixed
amount per year on the property. Under this arrangement, you are leasing (rather
than buying) the land on which your home is located.
taxmap/pubs/p530-000.htm#en_us_publink100011864If you make annual or periodic rental payments on a redeemable
ground rent, you can deduct the payments as mortgage interest. The ground rent
is a redeemable ground rent only if all of the following are true.
- Your lease, including renewal periods, is for more than 15
years.
- You can freely assign the lease.
- You have a present or future right (under state or local law)
to end the lease and buy the lessor's entire interest in the land by paying a
specified amount.
- The lessor's interest in the land is primarily a security
interest to protect the rental payments to which he or she is entitled.
Payments made to end the lease and buy the lessor's entire interest
in the land are not redeemable ground rents. You cannot deduct them.
taxmap/pubs/p530-000.htm#en_us_publink100011865Payments on a nonredeemable ground rent are not mortgage interest.
You can deduct them as rent only if they are a business expense or if they are
for rental property.
taxmap/pubs/p530-000.htm#en_us_publink100011866You can usually treat the interest on a loan you took out to
buy stock in a cooperative housing corporation as home mortgage interest if you
own a cooperative apartment and the cooperative housing corporation meets the
conditions described earlier under
Special Rules for Cooperatives. In addition, you can treat as home mortgage interest your
share of the corporation's deductible mortgage interest. Figure your share of
mortgage interest the same way that is shown for figuring your share of real
estate taxes in the
Example
under
Division of real estate taxes, earlier. For more information on cooperatives, see
Special Rule for Tenant-Stockholders in Cooperative Housing
Corporations
in Publication 936.
taxmap/pubs/p530-000.htm#en_us_publink100011867You must reduce your mortgage interest deduction by your share
of any cash portion of a patronage dividend that the cooperative receives. The
patronage dividend is a partial refund to the cooperative housing corporation of
mortgage interest it paid in a prior year.
If you receive a Form 1098 from the cooperative housing corporation,
the form should show only the amount you can deduct.
taxmap/pubs/p530-000.htm#en_us_publink100011869One item that normally appears on a settlement or closing statement
is home mortgage interest.
You can deduct the interest that you pay at settlement if you
itemize your deductions on Schedule A (Form 1040). This amount should be
included in the mortgage interest statement provided by your lender. See the
discussion under
Mortgage Interest Statement,
later. Also, if you pay interest in advance, see
Prepaid interest,
earlier, and
Points,
next.
taxmap/pubs/p530-000.htm#en_us_publink100011870The term "points" is used to describe certain charges paid, or
treated as paid, by a borrower to obtain a home mortgage. Points also may be
called loan origination fees, maximum loan charges, loan discount, or discount
points.
A borrower is treated as paying any points that a home seller
pays for the borrower's mortgage. See
Points paid by the seller, later.
taxmap/pubs/p530-000.htm#en_us_publink100011871You cannot deduct the full amount of points in the year paid.
They are prepaid interest, so you generally must deduct them over the life
(term) of the mortgage.
taxmap/pubs/p530-000.htm#en_us_publink100011872You can deduct the full amount of points in the year paid if
you meet all the following tests.
- Your loan is secured by your main home. (Generally, your main
home is the one you live in most of the time.)
- Paying points is an established business practice in the area
where the loan was made.
- The points paid were not more than the points generally charged
in that area.
- You use the cash method of accounting. This means you report
income in the year you receive it and deduct expenses in the year you pay them.
Most individuals use this method.
- The points were not paid in place of amounts that ordinarily
are stated separately on the settlement statement, such as appraisal fees,
inspection fees, title fees, attorney fees, and property taxes.
- The funds you provided at or before closing, plus any points
the seller paid, were at least as much as the points charged. The funds you
provided do not have to have been applied to the points. They can include a down
payment, an escrow deposit, earnest money, and other funds you paid at or before
closing for any purpose. You cannot have borrowed these funds from your lender
or mortgage broker.
- You use your loan to buy or build your main home.
- The points were computed as a percentage of the principal
amount of the mortgage.
- The amount is clearly shown on the settlement statement (such
as the Uniform Settlement Statement, Form HUD-1) as points charged for the
mortgage. The points may be shown as paid from either your funds or the
seller's.
Note.If you meet all of the tests listed above and you itemize your
deductions in the year you get the loan, you can either deduct the full amount
of points in the year paid or deduct them over the life of the loan, beginning
in the year you get the loan. If you do not itemize your deductions in the year
you get the loan, you can spread the points over the life of the loan and deduct
the appropriate amount in each future year, if any, when you do itemize your
deductions.
taxmap/pubs/p530-000.htm#en_us_publink100011874You can also fully deduct in the year paid points paid on a loan
to improve your main home, if you meet the first six tests listed earlier.
taxmap/pubs/p530-000.htm#en_us_publink100011875If you use part of the refinanced mortgage proceeds to improve
your main home and you meet the first six tests listed earlier, you can fully
deduct the part of the points related to the improvement in the year you paid
them with your own funds. You can deduct the rest of the points over the life of
the loan.
taxmap/pubs/p530-000.htm#en_us_publink100011876
If you do not qualify under the exception to deduct the full amount of points in
the year paid (or choose not to do so), see
Points
in Publication 936 for the rules on when and how much you can
deduct.
taxmap/pubs/p530-000.htm#en_us_publink100011877You can use Figure A as a quick guide to see whether your points
are fully deductible in the year paid.
taxmap/pubs/p530-000.htm#en_us_publink100011878Amounts charged by the lender for specific services connected
to the loan are not interest. Examples of these charges are:
- Appraisal fees,
- Notary fees, and
- Preparation costs for the mortgage note or deed of trust.
You cannot deduct these amounts as points either in the year
paid or over the life of the mortgage. For information about the tax treatment
of these amounts and other settlement fees and closing costs, see
Basis,
later.
The term "points" includes loan placement fees that the seller
pays to the lender to arrange financing for the buyer.
taxmap/pubs/p530-000.htm#en_us_publink100011880The seller cannot deduct these fees as interest; but, they are
a selling expense that reduces the seller's amount realized. See Publication 523
for more information.
taxmap/pubs/p530-000.htm#en_us_publink100011881The buyer treats seller-paid points as if he or she had paid
them. If all the tests listed earlier under
Exception
are met, the buyer can deduct the points in the year paid. If any of those tests
are not met, the buyer must deduct the points over the life of the loan.
The buyer must also reduce the basis of the home by the amount
of the seller-paid points. For more information about the basis of your home,
see
Basis, later.
taxmap/pubs/p530-000.htm#en_us_publink100011882If you meet all the tests listed earlier under
Exception
except that the funds you provided were less than the points charged to you
(test 6), you can deduct the points in the year paid up to the amount of funds
you provided. In addition, you can deduct any points paid by the seller.
taxmap/pubs/p530-000.htm#en_us_publink100011883Example 1.(p6)
When you took out a $100,000 mortgage loan to buy your home in
December, you were charged one point ($1,000). You meet all the tests for
deducting points in the year paid (see
Exception,
earlier), except the only funds you provided were a $750 down payment. Of the
$1,000 you were charged for points, you can deduct $750 in the year paid. You
spread the remaining $250 over the life of the mortgage.
taxmap/pubs/p530-000.htm#en_us_publink100011884Example 2.(p6)
The facts are the same as in
Example 1,
except that the person who sold you your home also paid one
point ($1,000) to help you get your mortgage. In the year paid, you can deduct
$1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller).
You spread the remaining $250 over the life of the mortgage. You must reduce the
basis of your home by the $1,000 paid by the seller.
taxmap/pubs/p530-000.htm#en_us_publink100011885If you meet all the tests under
Exception,
earlier, except that the points paid were more than are generally
charged in your area (test 3), you can deduct in the year paid only the points
that are generally charged. You must spread any additional points over the life
of the mortgage.
taxmap/pubs/p530-000.htm#en_us_publink100011886If you spread your deduction for points over the life of the
mortgage, you can deduct any remaining balance in the year the mortgage ends. A
mortgage may end early due to a prepayment, refinancing, foreclosure, or similar
event.
taxmap/pubs/p530-000.htm#en_us_publink100011887Dan paid $3,000 in points in 2003 that he had to spread out over
the 15-year life of the mortgage. He had deducted $1,400 of these points through
2009.
Dan prepaid his mortgage in full in 2010. He can deduct the remaining
$1,600 of points in 2010.
taxmap/pubs/p530-000.htm#en_us_publink100011888If you refinance the mortgage with the same lender, you cannot
deduct any remaining points for the year. Instead, deduct them over the term of
the new loan.
taxmap/pubs/p530-000.htm#en_us_publink100011889The mortgage interest statement you receive should show not only
the total interest paid during the year, but also your deductible points paid
during the year. See
Mortgage Interest Statement,
later.
taxmap/pubs/p530-000.htm#en_us_publink100011890Enter on Schedule A (Form 1040), line 10, the home mortgage interest
and points reported to you on Form 1098 (discussed next). If you did not receive
a Form 1098, enter your deductible interest on line 11, and any deductible
points on line 12. See
Table 1
for a summary of where to deduct home mortgage interest and real estate taxes.
If you paid home mortgage interest to the person from whom you
bought your home, show that person's name, address, and social security number
(SSN) or employer identification number (EIN) on the dotted lines next to line
11. The seller must give you this number and you must give the seller your SSN.
Form W-9, Request for Taxpayer Identification Number and Certification, can be
used for this purpose. Failure to meet either of these requirements may result
in a $50 penalty for each failure.
taxmap/pubs/p530-000.htm#en_us_publink100011891If you paid $600 or more of mortgage interest (including certain
points and mortgage insurance premiums) during the year on any one mortgage to a
mortgage holder in the course of that holder's trade or business, you should
receive a Form 1098 or similar statement from the mortgage holder. The statement
will show the total interest paid on your mortgage during the year. If you
bought a main home during the year, it also will show the deductible points you
paid and any points you can deduct that were paid by the person who sold you
your home. See
Points,
earlier.
The interest you paid at settlement should be included on the
statement. If it is not, add the interest from the settlement sheet that
qualifies as home mortgage interest to the total shown on Form 1098 or similar
statement. Put the total on Schedule A (Form 1040), line 10, and attach a
statement to your return explaining the difference. Write "See attached" to the
right of line 10.
A mortgage holder can be a financial institution, a governmental
unit, or a cooperative housing corporation. If a statement comes from a
cooperative housing corporation, it generally will show your share of interest.
Your mortgage interest statement for 2010 should be provided
or sent to you by January 31, 2011. If it is mailed, you should allow adequate
time to receive it before contacting the mortgage holder. A copy of this form
will be sent to the IRS also.
taxmap/pubs/p530-000.htm#en_us_publink100011892You bought a new home on May 3. You paid no points on the purchase.
During the year, you made mortgage payments which included $4,480 deductible
interest on your new home. The settlement sheet for the purchase of the home
included interest of $620 for 29 days in May. The mortgage statement you receive
from the lender includes total interest of $5,100 ($4,480 + $620). You can
deduct the $5,100 if you itemize your deductions.
taxmap/pubs/p530-000.htm#en_us_publink100011893If you receive a refund of mortgage interest you overpaid in
a prior year, you generally will receive a Form 1098 showing the refund in box
3. Generally, you must include the refund in income in the year you receive it.
See
Refund of home mortgage interest, earlier, under
Home Mortgage Interest.
taxmap/pubs/p530-000.htm#en_us_publink100011894If you and at least one other person (other than your spouse
if you file a joint return) were liable for and paid interest on a mortgage that
was for your home, and the other person received a Form 1098 showing the
interest that was paid during the year, attach a statement to your return
explaining this. Show how much of the interest each of you paid, and give the
name and address of the person who received the form. Deduct your share of the
interest on Schedule A (Form 1040), line 11, and write "See attached" to the
right of that line.
taxmap/pubs/p530-000.htm#en_us_publink100011895You may be able to take an itemized deduction on Schedule A (Form
1040), line 13, for premiums you pay or accrue during 2010 for qualified
mortgage insurance in connection with home acquisition debt on your qualified
home.
Mortgage insurance premiums you paid or accrued on any mortgage
insurance contract issued before January 1, 2007, are not deductible as an
itemized deduction.
taxmap/pubs/p530-000.htm#en_us_publink100011898Qualified mortgage insurance is mortgage insurance provided by
the Veterans Administration, the Federal Housing Administration, or the Rural
Housing Administration, and private mortgage insurance (as defined in section 2
of the Homeowners Protection Act of 1998 as in effect on December 20, 2006).
taxmap/pubs/p530-000.htm#en_us_publink100011899If you paid premiums that are allocable to periods after 2010,
you must allocate them over the shorter of:
- The stated term of the mortgage, or
- 84 months, beginning with the month the insurance was obtained.
The premiums are treated as paid in the year to which they were
allocated. If the mortgage is satisfied before its term, no deduction is allowed
for the unamortized balance. See Publication 936 for details.
The allocation rules, explained above, do not apply to qualified
mortgage insurance provided by the Department of Veterans Affairs or Rural
Housing Service.
taxmap/pubs/p530-000.htm#en_us_publink100011900Home acquisition debt is a mortgage you took out after October
13, 1987, to buy, build, or substantially improve a qualified home. It also must
be secured by that home.
If the amount of your mortgage is more than the cost of the home
plus the cost of any substantial improvements, only the debt that is not more
than the cost of the home plus improvements qualifies as home acquisition debt.
taxmap/pubs/p530-000.htm#en_us_publink100011901The total amount you can treat as home acquisition debt at any
time on your home cannot be more than $1 million ($500,000 if married filing
separately).
taxmap/pubs/p530-000.htm#en_us_publink100046831You can exclude from gross income any discharges of qualified
principal residence indebtedness made after 2006 and before 2013. You must
reduce the basis of your principal residence (but not below zero) by the amount
you exclude.
taxmap/pubs/p530-000.htm#en_us_publink100046832Your principal residence is the home where you ordinarily live
most of the time. You can have only one principal residence at any one time.
taxmap/pubs/p530-000.htm#en_us_publink100046833This is a mortgage that you took out to buy, build, or substantially
improve your principal residence and that is secured by that residence. If the
amount of your original mortgage is more than the cost of your principal
residence plus the cost of substantial improvements, qualified principal
residence indebtedness cannot be more than the cost of your principal residence
plus improvements.
Any debt secured by your principal residence that you use to
refinance qualified principal residence indebtedness is qualified principal
residence indebtedness up to the amount of your old mortgage principal just
before the refinancing. Additional debt incurred to substantially improve your
principal residence is also qualified principal residence indebtedness.
taxmap/pubs/p530-000.htm#en_us_publink100046834You can only exclude debt discharged after 2006 and before 2013.
The most you can exclude is $2 million ($1 million if married filing
separately). You cannot exclude any amount that was discharged because of
services performed for the lender or on account of any other factor not directly
related either to a decline in the value of your residence or to your financial
condition.
taxmap/pubs/p530-000.htm#en_us_publink100046835If only a part of a loan is qualified principal residence indebtedness,
you can exclude only the amount of the discharge that is more than the amount of
the loan (immediately before the discharge) that is not qualified principal
residence indebtedness.
taxmap/pubs/p530-000.htm#en_us_publink100011902This means your main home or your second home. A home includes
a house, condominium, cooperative, mobile home, house trailer, boat, or similar
property that has sleeping, cooking, and toilet facilities.
taxmap/pubs/p530-000.htm#en_us_publink100011903You can have only one main home at any one time. This is the
home where you ordinarily live most of the time.
taxmap/pubs/p530-000.htm#en_us_publink100011904If you have a second home, use part of your home for other than
residential living (such as a home office), rent out part of your home, or are
having your home constructed, see
Qualified Home in Publication 936.
taxmap/pubs/p530-000.htm#en_us_publink100011971If your adjusted gross income (AGI) on Form 1040, line 38, is
more than $100,000 ($50,000 if your filing status is married filing separately),
the amount of your mortgage insurance premiums that are deductible is reduced
and may be eliminated. See
Line 13 in the instructions for Schedule A (Form 1040) and complete
the
Qualified Mortgage Insurance Premiums Deduction Worksheet
to figure the amount you can deduct. If your AGI is more than $109,000 ($54,500
if married filing separately), you cannot deduct your mortgage insurance
premiums.
taxmap/pubs/p530-000.htm#en_us_publink100011972The amount of mortgage insurance premiums you paid during 2010,
should be reported in box 4. See
Form 1098, Mortgage Interest Statement in Publication 936.
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