IRS Tax Law – Mortgage Interest

Have a question about a new tax law? You have come to the right place. Read the following question and get the IRS tax law.

Tax Question

My husband and I are new home owners, can we deduct our mortgage interest and property tax?

Yes, if you itemize your deductions on schedule A of your 1040. You can deduct the mortgage interest and property tax you have paid. In fact, if you meet the basic requirements you can deduct the interest you paid on a mortgage that is your primary resident or a second home. This also includes any property taxes you pay on any property you own.

Many different types of loans qualify for the mortgage interest deduction. A mortgage you used to buy or improve your home is interest deductible. Also included in the interest deduction is a line of credit, or a home equity loan use to buy or improve your home. To qualify for the mortgage interest deduction the loan must be for your primary residence or a second home. That means that you can not deduct the mortgage interest on a third or fourth home. Loans that are not secured by your home are typically considered to be personal loans. Personal loan interest is not tax deductible.

You can deduct the mortgage interest up to $1 million dollars on your primary or second home. This includes buying, constructions, and improvements. You can also deduct the interest on home equity debt up to $100,000 regardless of how you used the funds. Therefore, you can use a home equity loan to buy a car, or pay your child tuition. If you itemized your deductions you can also deduct the property tax on any residence or land that you own.

TurboTax tax software can guide you through the mortgage interest deduction process.