By:  LINDSEY O’NEILL, ESQ

IRS Publication 936 on “Home Interest Mortgage Deduction” sets forth what expenses a homeonwer can deduct from gross income.  Any interest paid on a loan secured by your home, including a primary home loan, a second mortgage, a line of credit, a home equity loan, or a mortgage for a second home is potentially deductible, if all the IRS conditions are met.   For many homeowners who took out home equity lines over the past few years, the home mortgage interest deduction may offer some tax relief from the financial burden of those loans at tax time. 

For folks who sold their homes when they were “upside down” in the mortgage (they owed more on the home than what they were able to sell the home for), the Mortgage Forgiveness Debt Relief Act of 2007 (the “Act”) may be another area of tax relief.  Previously, if a portion of a home loan was forgiven by a lender, the amount of the forgiveness would have been included as income on your tax return.  The Act amended the Internal Revenue Code to exclude the amount of the loan forgiveness on a principal residence from gross income, subject to certain limitations.  Another area of tax relief offered by the Act is an income deduction for premiums paid on mortgage insurance. 

Homeowners are generally encouraged to seek professional assistance when navigating the various deductions and other tax relief available for home expenses.