Home Mortgage Interest & Points

You can deduct your home mortgage interest on the first $750,000 of indebtedness. If you’re married filing separately it’s the first $375,000. However, if you are deducting mortgage interest from indebtedness before December 16, 2017, there are higher limitations. It stands at $1 million and $500,000 if married filing separately.

For the tax years prior to 2018, you could deduct the interest paid on up to $100,000 of home equity debt. It also includes:

• A mortgage used to buy your home
• Taking out a second mortgage
• A line of credit
• Taking out a home equity loan

In order to deduct your mortgage points, you must meet certain requirements:

• the loan secured by your main home
• the loan was taken out to buy or build your main home
• the payment of points an established business practice in your area
• the points were not paid more than the amount generally charged in your area
• You used the cash method of accounting
• They are not used for items that are typically stand-alone fees such as property taxes
• You did not borrow the funds to pay for the points from the mortgage lender or broker

This entry was posted on Monday, November 16th, 2020 at 5:27 pm and is filed under Deductions. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.