Welcome Guest. Register Now!  


Itemized Deductions Schedule-A


Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 01-02-2015, 05:28 PM
Junior Member
 
Join Date: Jan 2015
Posts: 1
Past due mortgage interest deductions

A homeowner is in foreclosure for several years, and has not paid or deducted any mortgage interest during this time. The homeowner and the lender agree to a mortgage modification under which the homeowner pays the full principal and all past due interest. This amount is then refinanced into a new mortgage.

Since the original mortgage is now satisfied, along with all past due interest, can the homeowner deduct the past due interest on his taxes in the year the mortgage is refinanced?



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 01-03-2015, 10:16 PM
Moderator
 
Join Date: Oct 2010
Posts: 5,258
Quote:
Originally Posted by FLBill1 View Post
A homeowner is in foreclosure for several years, and has not paid or deducted any mortgage interest during this time. The homeowner and the lender agree to a mortgage modification under which the homeowner pays the full principal and all past due interest. This amount is then refinanced into a new mortgage.

Since the original mortgage is now satisfied, along with all past due interest, can the homeowner deduct the past due interest on his taxes in the year the mortgage is refinanced?
as the loan is repaid the the remaining balance is deductible; There are two types of debt that qualify for the mortgage interest tax deduction: acquisition debt and equity debt. Acquisition debt is any secured loan you get to buy, build, or remodel your main or second home. It includes refinanced debt up to the amount of your old mortgage balance just before doing the refinance. The total amount of interest you can deduct for acquisition debt is limited to one million dollars for your main and second home (or $500k if you’re married filing separately).


When you refinance a mortgage that was treated as acquisition debt, the balance of the new mortgage is also treated as acquisition debt up to the balance of the old mortgage. The excess over the old mortgage balance is treated as home equity debt. Interest on up to $100k of that excess debt may be deductible under the rules for home equity debt. Also, you can deduct the points you pay to get the new loan over the life of the loan, assuming all of the new loan balance qualifies as either acquisition debt or home equity debt of up to $100k.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Mortgage Interest Clboyd09 Divorce Tax Issues 4 01-11-2014 11:15 PM
Mortgage Interest - 2012 da91crex For 2012 1 12-20-2012 09:08 PM
MFS: mortgage in spouse's name; payments via joint account; mortgage interest / real estate deduction options ohjustbob Itemized Deductions 1 03-08-2011 01:08 AM
Investment mortgage interest Jaxtivers Miscellaneous 0 04-14-2010 07:06 PM
Mortgage Interest Deductions - Married Filing Separate ajbarrick Itemized Deductions 1 03-13-2008 10:04 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning
 
 
 

» Recent Tax Q&A
No Threads to Display.