| Let us take a minute and understand tax deductions | | | | but only if throughout the current tax year these |
| for second mortgage and home equity loan interest. | | | | mortgages totaled $100,000 or less ($50,000 or less if |
| Among the most attractive features of second | | | | married filing separately) and totaled no more than the |
| mortgages is the federal tax-deductibility feature of | | | | fair market value of your home reduced by (1) and |
| their interest payments, which reduces the effective | | | | (2).Types of Mortgage DebtsA grandfathered debt is |
| cost of the loans to borrowers. However, before | | | | fully deductible with no limits.A home acquisition debt, |
| signing those loan papers, it's important to understand | | | | also known as acquisition indebtedness, is money you |
| just what you can and cannot deduct off your | | | | borrow to buy, build or substantially improve your |
| taxes.To qualify for mortgage interest tax deductions, | | | | qualified residence (an IRS term for your first or |
| your mortgage must be secured by your first or | | | | second home). A home equity debt, also known as |
| second home. Loans secured by subsequent homes | | | | equity indebtedness, is money you borrow against the |
| (e.g., third or fourth homes) do not qualify. A home, | | | | equity in your qualified residence or money you cash |
| according to the Internal Revenue Service (IRS), must | | | | out on a mortgage refinance for any reason other |
| be a house, condominium, cooperative, mobile home, | | | | than home improvement. To deduct the mortgage |
| boat, recreational vehicle or similar property that has | | | | interest, you will need to file a Form 1040 (the long |
| sleeping, cooking and toilet facilities.IRS Publication 936 | | | | form with itemized deductions, not 1040 EZ). Your |
| states that all of your mortgages must fit into one or | | | | lender will send you a Form 1098 listing the mortgage |
| more of the following three categories at all times | | | | interest you paid during the tax year. Check with a |
| during the year.1. Mortgages taken out on or before | | | | licensed tax professional for other conditions and limits |
| October 13, 1987 (grandfathered debt).2. Mortgages | | | | that may apply.Maria Ny is an acclaimed free-lance |
| taken out after October 13, 1987, to buy, build, or | | | | writer who has published many mortgage related |
| improve your home (home acquisition debt), but only if | | | | articles. Get more info at BD Nationwide Mortgage for |
| throughout the current tax year these mortgages plus | | | | Second Mortgage & Home Equity Loans. For more |
| any grandfathered debt totaled $1 million or less | | | | 2nd mortgage advice & home equity refinancing tips, |
| ($500,000 or less if married filing separately).3. | | | | visit Fixed Home Equity Loans and Second Mortgage |
| Mortgages taken out after October 13, 1987, other than | | | | Refinance Loans. |
| to buy, build, or improve your home (home equity debt), | | | | |