Points in refinancing some home mortgages may now be currently deductible
Article Abstract:
The Eighth Circuit Court of Appeals decision to overturn the Tax Court in the Huntsman case allows the deduction of points in the refinancing of some home mortgages and limits Rev. Rul. 87-22, which limits taxpayers to deduct ratably over the life of a loan only those points paid for refinancing home mortgages. The Court decided that the statute regulating deductions for points paid in refinancing a home mortgage, which requires that a taxpayer's indebtedness be in connection with the improvement or purchase of the taxpayer's residence, does not require the indebtedness to be directly related to the actual acquisition of the residence. The indebtedness can be merely associated with or related to the purchase of the taxpayer's residence.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1990
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Refinancing a home mortgage may have adverse tax costs
Article Abstract:
Restrictions placed on the deductibility of interest in mortgage refinancings may lessen the after-tax advantage of the refinancing arrangement. Generally, personal interest is not considered deductible. Homeowners can work around this problem by taking advantage of the exception for qualified residence interest as expressed in Section 163(h)(2). Under this section, the qualified residence interest deduction may be obtained for interest on loans granted to a qualified residence, which can either be a principal or a second home. Temp. Reg. 1.163-10T(p) identifies the types of residences that qualify for the deduction.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1992
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Choosing the right type of mortgage and determining how best to treat loan costs
Article Abstract:
The deductibility of residential mortgage interest has grown in importance since the Tax Reform Act of 1986 phased out deductibility of consumer interest. Residential mortgages can be classified into two groups, fixed rate mortgages and alternative mortgage instruments. Alternative mortgages include adjustable rate mortgages, graduated payment mortgages, growing equity mortgages, and price level adjusted mortgages. Loan costs are fully deductible except for indebtedness which exceeds the cost of a house plus improvements.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1987
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