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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. Is the mortgage interest and property tax on a second residence deductible?
  5. 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: 12/21/2012

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, but only if it becomes your qualified home at the time it is ready for occupancy.  The 24-month period can start any time on or after the day construction begins. As a qualified home, the interest paid within certain limitations may qualify as deductible mortgage interest.

Rev. date: 12/21/2012

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: 12/21/2012

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 that is secured by your personal residence but is taken out for reasons other than to buy, build, or substantially improve your home, such as to pay off personal debts, may still qualify as home equity debt.  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 ($50,000 if married filing separately). You may deduct the interest paid during the year on home equity debt as an itemized deduction on Schedule A (Form 1040) (PDF), Itemized Deductions, generally on line 10.

Rev. date: 12/21/2012

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: 04/25/2013

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, while you have to deduct the points over the life of the loan (amortize) you don't divide the points by 30.  Instead you divide the points by the number of payments over the term of the loan and deduct points for each year according to the number of payments made in that year.