ERICKSON

Here you will find some answers to the top questions we’ve received. If you do not find your answer here, please contact us, and a real estate specialist will contact you as soon as possible.

Question:

I took out a home equity loan to pay off personal debts. Is this interest deductible? Where do I enter this amount on my tax return?

Answer:

A loan taken out for reasons other than to buy, build, or substantially improve your home, such as to pay off personal debts may qualify as home equity debt. The interest would be deducted on line 10, Form 1040, Schedule A [PDF], Itemized Deductions. The amount you can deduct as interest on home equity debt is subject to certain limitations. For more information, refer to Publication 936, Home Mortgage Interest Deduction; and Tax Topic 505, Interest Expense.

IRS.gov

Question:

I refinanced my home last year and paid points. Are they all deductible this year?

Answer:

Generally, points paid to refinance your home are not deductible in their entirety in the year paid. They are "amortized" or deducted over the life of the loan. For more information, refer to Publication 936, Home Mortgage Interest Deduction, and Tax Topic 504, Home Mortgage Points.

IRS.gov

Question:

Is interest on a home equity line of credit deductible as a second mortgage?

Answer:

You may deduct home equity debt interest, as an itemized deduction, if you are legally liable to pay the interest, pay the interest in the tax year, secure the debt with your home, and do not exceed certain limitations. For more information, refer to Publication 936, Home Mortgage Interest Deduction; and Tax Topic 505, Interest Expense.

IRS.gov