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.

Cases, Tax courts, United States. Court of Appeals for the 8th Circuit

---

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.

Tax deductions

---

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.

Finance, Personal finance, Home ownership

Similar abstracts:

• Abstracts: 'Use' of principal residence does not require occupancy. Avoiding gain when mortgage payments cannot be made. Renting a residence need not preclude deferring gain on its later sale
• Abstracts: Adjusted current earnings (not quite E&P) must now be calculated to determine the AMT. Allocating purchase price to assets regains importance
• Abstracts: Default risk in futures markets: the customer-broker relationship. Volatility in wheat spot and futures markets, 1950-1993: government farm programs, seasonality, and causality
• Abstracts: The Force and financial reporting. The single European trade market
• Abstracts: All the president's taxmen. Don't mess with old Uncle Sam. The uncharted minefield of US company tax

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.