• Home
mortgage interest paid, including acquisition debt and home equity debt.
• Points
and loan origination fees to obtain a mortgage or to refinance a mortgage.
• Investment
interest paid, such as margin interest on a brokerage account.
Mortgage
Insurance Premiums
Premiums paid for acquisition indebtedness for insurance
contracts after December 31, 2006 are treated as deductible mortgage insurance.
The deduction is phased out for taxpayers with adjusted gross income over
$100,000 ($50,000 for Married Filing Separately). The deduction is not allowed
when adjusted gross income exceeds $109,000 ($54,500 Married Filing
Separately).
Qualified mortgage insurance providers include the Veterans
Administration, the Federal Housing Administration or Rural Housing
Administration, and private mortgage insurance.
Prepaid
Mortgage Insurance Premiums
For taxpayers who prepay a
portion or all of the mortgage insurance premiums on a mortgage, IRS rules
dictate that the prepaid amount cannot be deducted in the year paid. Instead,
the amount is required to be spread out over the shorter of: • The stated term
of the mortgage, or
• 84 months (7 years), beginning with
the month in which the mortgage insurance was obtained.
These allocation rules do not apply to mortgage insurance provided by the Department of Veterans Affairs or Rural Housing Administration.