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Frequently Asked Tax Questions

Itemized Deductions, Standard Deductions - Real Estate (Taxes, Mortgage Interest, Points, Other Property Expenses)

  1. I have a mortgage for land that I intend to build a home on. Can the interest be deducted for the mortgage?
  2. Is interest on a home equity line of credit deductible as a second mortgage?
  3. I took out a home equity loan secured by my main home to pay off personal debts. Is this interest deductible? Where do I enter this amount on my tax return?
  4. Our home was seriously damaged by flooding last year. Are there special provisions for the timing of claiming a loss since our home is located in a federally declared disaster area?
  5. Is the mortgage interest and property tax on a second residence deductible?
  6. If I must deduct points over the life of my mortgage, and I have a 30 year mortgage, does this mean that I divide the points paid by 30 and enter that amount on Schedule A?

Rev. date: 08/04/2012

I have a mortgage for land that I intend to build a home on. Can the interest be deducted for the mortgage?

You can treat a home under construction as a qualified home for a period of up to 24 months starting any time on or after the day construction begins.  The interest you paid on the mortgage during the 24-month period may qualify as deductible mortgage interest.

Rev. date: 08/04/2012

Is interest on a home equity line of credit deductible as a second mortgage?

You may deduct home equity debt interest, as an itemized deduction, if all the following conditions apply:

Rev. date: 08/17/2012

I took out a home equity loan secured by my main home to pay off personal debts. Is this interest deductible? Where do I enter this amount on my tax return?

A loan taken out for reasons other than to buy, build, or substantially improve your home, such as to pay off personal debts may qualify as home equity debt.

Rev. date: 08/04/2012

Our home was seriously damaged by flooding last year. Are there special provisions for the timing of claiming a loss since our home is located in a federally declared disaster area?

Casualty losses not compensated for by insurance or otherwise are generally deductible only in the year the casualty occurred. Consider the following:
For more information on disaster area losses (including flood losses), refer to:

Rev. date: 08/17/2012

Is the mortgage interest and property tax on a second residence deductible?

The mortgage interest on a second home which you use as a residence for some portion of the taxable year is generally deductible if the interest satisfies the same requirements for deductibility as interest on a primary residence.

Rev. date: 08/06/2012

If I must deduct points over the life of my mortgage, and I have a 30 year mortgage, does this mean that I divide the points paid by 30 and enter that amount on Schedule A?

No, you don't divide the points by 30. If you choose to use the straight-line method, you need to divide the points by the number of payments over the term of the loan and deduct points for a year according to the number of payments made in the year.