Frequently Asked Tax Questions
Itemized Deductions, Standard Deductions - Real Estate (Taxes, Mortgage Interest, Points, Other Property
Expenses)
Rev. date: 08/04/2012
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
You may deduct home equity debt interest, as an itemized deduction, if all the following conditions
apply:
- You are legally liable to pay the interest
- You pay the interest in the tax year
- The debt is secured with your home
- The home equity debt is limited to the fair market value of the home reduced by home acquisition debt, up to a total of
$100,000.
Rev. date: 08/17/2012
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
Casualty losses not compensated for by insurance or otherwise are generally deductible only in the year the casualty occurred. Consider the
following:
-
If you have a deductible loss from a disaster in an area that is officially designated by the President of the United States as eligible for federal disaster assistance, you can choose to deduct that loss on your return for the year immediately preceding the loss
year.
-
You may treat the loss as having occurred in either the current year or the previous year, whichever provides the best tax results for
you.
-
If you have already filed your return for the preceding year, the loss may be claimed by filing an amended return,
Form 1040X (PDF),
Amended U.S. Individual Income Tax Return.
For more information on disaster area losses (including flood losses), refer
to:
-
-
-
Publication 584,
Casualty, Disaster, and Theft Loss Workbook, can be used to help you catalog your property
-
Rev. date: 08/17/2012
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.
- The limitation for mortgage interest on your primary and secondary residence is $1,000,000 for acquisition indebtedness and $100,000 for home equity
indebtedness.
- Real estate taxes paid on your primary and second residence are, generally,
deductible.
- Deductible real estate taxes include any state, local, or foreign taxes based on the value of the real property levied for the general public
welfare.
- Deductible real estate taxes do not include taxes charged for local benefits and improvements that increase the value of the property, such as assessments for sidewalks, water mains, sewer lines, parking lots, and similar
improvements.
Rev. date: 08/06/2012
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.
-
If the loan ends prematurely, due to payoff or refinance with a different lender, for example, then the remaining points are deducted in that
year.
-
Points not included in
Form 1098
(PDF), (usually not included on a refinance) should be entered on
Form 1040 Schedule A (PDF),
Itemized Deductions.
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