Mortgage Interest Deduction
Part of the American dream has always been to own your own home. Every year thousands of people put down the payments, open a mortgage, and purchase their first ever home. As any homeowner knows, this can be expensive, between the insurance, mortgage payments, and interest, the costs add up. So the IRS decided to help the taxpayers out by allowing a deduction for interest paid on the mortgages.
Publication 936 from the IRS was published and lays out the format for determining the amount of deduction allowed, but the good news is you can deduct the interest. Home mortgage interest is any interest you pay on a loan secured by your home (main or second). Additionally, it may be the original mortgage or even a second mortgage.
The taxpayer can deduct home mortgage interest if all the following conditions are met:
You file Form 1040 and itemize deductions on Schedule A (form 1040)
The mortgage is a secured debt on a qualified home in which you have an ownership interest.
Furthermore, interest on home equity loans and lines of credit are deductible only if the borrowed funds are used to buy, build, or substantially improve the taxpayer’s home that secures the loan per publication 936. If you own a home and are looking for help on the deduction, contact the professionals at the Center for Financial, Legal & Tax Planning, Inc.