Mortgage Related Deductions On Your 2007 Income Tax Return
The most common deduction is your interest paid on a mortgage loan for a first or second home. This item is, and has always been fully deductible; subject to the following limitations: acquisition loans up to $1 million and home-equity loans up to $100,000. If you are married, but file separately, the limits are split in half.
However, there is an area often overlooked by buyers. Points paid to a mortgage lender will reduce interest rates. Each point is 1 percent of the loan, so that on a $300,000 mortgage, a borrower will have to pay $3,000. And typically, for every point that you pay a lender, the interest rate will be reduced by one-eighth of a percent.
Two other useful IRS documents are Publication 936, entitled “Home Mortgage Interest Deductions,” and Publication 910, “IRS Guide to Free Tax Services.”
