Home Mortgage Interest

• Most homeowners qualify to deduct their mortgage interest fully. In some instances, however, the amount deducted is affected by the date the mortgage was acquired, the amount of the mortgage or how the mortgage was used. In addition, in order to take the mortgage interest deduction, the mortgage must be against either a first home and/or a second home.
  
  You also must meet at least one of three criteria to take the mortgage interest deduction The first is that you acquired the mortgage before Oct. 13, 1987 which is also known as grandfathered debt. The second is that you acquired the mortgage after Oct. 13, 1987, it was used to build, buy or improve your home and the total mortgage plus any grandfathered debt amounted to $1 million or less throughout 2009, or $500,000 or less if your filing status is married and filing separately. The last criteria is that you acquired the mortgage after Oct. 13, 1987, and it was not used to build, buy or improve your home, commonly called a Home Equity Loan, that totaled $100,000 or less throughout 2009, or $50,000 or less if married and filing separately. You are limited to taking mortgage interest deductions only on the amounts that meet any of those three criteria.
  
  

Real Estate Taxes

• Generally, you can deduct the taxes paid to your local taxing authority on your federal taxes. This deduction must be only for the uniform tax rate charged to all properties in the taxing jurisdiction. You cannot deduct unit fees charged for a local service such as water delivery, periodic charges for services such as trash pickup or a flat fee charged for a single service provided to you. In addition, you cannot deduct assessments that add value to your property and only benefit the local area, such as the construction of sidewalks or a water system.
  
  

Mortgage Insurance Premiums

• Qualified mortgage insurance premiums can be deducted for premiums accrued or paid during the tax year. This deduction is available only to mortgage insurance contracts acquired Jan. 1, 2007 or later. Please note that if your adjusted gross income (AGI) is $100,000 or more, or $50,000 or more for those married and filing separately, your deduction will be reduced or completely eliminated. Once your AGI is $109,000, or $54,500 if married and filing separately, you will not be able to take this deduction.
  
  

Residential Rental Property

• Residential rental property also qualifies for a real estate tax deduction. Residential rental property is property in which 80 percent or more of the income comes from the rental unit. A taxpayer, generally, is able to deduct the depreciation of residential rental property up to 27.5 years. Also, if your rental expenses exceed your rental income, you may deduct a loss up to $25,000. The real estate loss deduction is limited by your adjusted gross income above $100,000.
  
  

Warnings

• This information is general in nature. It is always important to consult with a tax professional or accountant to get specific advice and counsel for your particular tax situation because tax laws change on a regular basis.