Deducting interest on your home mortgage

John Brown's Farmhouse
John Brown’s Farmhouse
by Tony the Misfit, on Flickr

Interest on your home mortgage is deductible from your taxes if you file Schedule A (i.e. you itemize deductions).  The mortgage must be secured by your home or your second home.

Mortgage interest paid to individuals (such as a relative) are also tax deductible.

Home equity loans (“second mortgages”) taken for home improvements are also usually tax deductible.  However, home equity loans taken to pay other expenses (such as buying a car) are subject to limitations.

Most points paid on mortgages are also tax deductible.

The rules here get quite complicated.  Here they are.

Oh, and by the way, tax deductible or not, never take out a loan that you won’t be able to pay back.

About Mark P. Holtzman

Chair of Accounting Department at Seton Hall University. PhD from The University of Texas at Austin. Worked at Deloitte's New York Office. BSBA from Hofstra University.

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