2017 Publication 936 P936
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Publication 936 Contents Home Mortgage Interest Deduction What’s New Cat. No. 10426G Department of the Treasury Internal Revenue Service For use in preparing 2017 Returns .................. 1 Reminders . . . . . . . . . . . . . . . . . . . 1 Introduction . . . . . . . . . . . . . . . . . . 2 Part I. Home Mortgage Interest Secured Debt . . . . . . . . . Qualified Home . . . . . . . . Special Situations . . . . . . Points . . . . . . . . . . . . . Form 1098, Mortgage Interest Statement . . . . . . . . . How To Report . . . . . . . . Special Rule for Tenant-Stockholders in Cooperative Housing Corporations . . . . . . . . . . . . . . . . . Index . . . . . . . . . . . . . . . 2 3 4 4 5 ...... 8 ...... 8 ...... 8 Part II. Limits on Home Mortgage Interest Deduction . . . . . . . Home Acquisition Debt . . . . . Home Equity Debt . . . . . . . . Grandfathered Debt . . . . . . . Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year How To Get Tax Help . . . . . . . . . . . . . . . . . . 9 . 9 10 10 . . . 11 . . . . . . . . . . . 14 . . . . . . . . . . . . . . . . . . . . . 16 What’s New Mortgage insurance premiums. The itemized deduction for mortgage insurance premiums expired on December 31, 2016. At the time this publication went to print, Congress was considering legisCAUTION lation to extend the itemized deduction for mortgage insurance premiums. To find out if this legislation was enacted, and for more details, go to IRS.gov/Extenders. ! Reminders Future developments. For the latest information about developments related to Pub. 936, Home Mortgage Interest Deduction, such as legislation enacted after it was published, go to IRS.gov/Pub936. Get forms and other information faster and easier at: • IRS.gov (English) • IRS.gov/Spanish (Español) • IRS.gov/Chinese (中文) Jan 31, 2018 • IRS.gov/Korean (한국어) • IRS.gov/Russian (Pусский) • IRS.gov/Vietnamese (TiếngViệt) Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing & Exploited Children® (NCMEC). Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Introduction This publication discusses the rules for deducting home mortgage interest. Part I contains general information on home mortgage interest, including points. It also explains how to report deductible interest on your tax return. Part II explains how your deduction for home mortgage interest may be limited. It contains Table 1, which is a worksheet you can use to figure the limit on your deduction. Comments and suggestions. We welcome your comments about this publication and your suggestions for future editions. You can send us comments through IRS.gov/FormComments. Or you can write to: Internal Revenue Service Tax Forms and Publications 1111 Constitution Ave. NW, IR-6526 Washington, DC 20224 Although we can’t respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax forms, instructions, and publications. Ordering forms and publications. Visit IRS.gov/FormsPubs to download forms and publications. Otherwise, you can go to IRS.gov/ OrderForms to order current and prior-year forms and instructions. Your order should arrive within 10 business days. Tax questions. If you have a tax question not answered by this publication, check IRS.gov and How To Get Tax Help at the end of this publication. Useful Items You may want to see: Publication 523 Selling Your Home Page 2 527 Residential Rental Property 530 Tax Information for Homeowners 535 Business Expenses See How To Get Tax Help near the end of this publication, for information about getting these publications. Part I. Home Mortgage Interest This part explains what you can deduct as home mortgage interest. It includes discussions on points and how to report deductible interest on your tax return. Generally, home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home). The loan may be a mortgage to buy your home, a second mortgage, a line of credit, or a home equity loan. You can deduct home mortgage interest if all the following conditions are met. You file Form 1040 and itemize deductions on Schedule A (Form 1040). The mortgage is a secured debt on a qualified home in which you have an ownership interest. Secured Debt and Qualified Home are explained later. Both you and the lender must intend that the loan be repaid. category.) If one or more of your mortgages doesn’t fit into any of these categories, use Part II of this publication to figure the amount of interest you can deduct. The three categories are as follows. 1. Mortgages you took out on or before October 13, 1987 (called grandfathered debt). 2. Mortgages you (or your spouse if married filing a joint return) took out after October 13, 1987, to buy, build, or improve your home (called home acquisition debt), but only if throughout 2017 these mortgages plus any grandfathered debt totaled $1 million or less ($500,000 or less if married filing separately). 3. Mortgages you (or your spouse if married filing a joint return) took out after October 13, 1987, that are home equity debt but that aren’t home acquisition debt, but only if throughout 2017 these mortgages totaled $100,000 or less ($50,000 or less if married filing separately) and totaled no more than the fair market value of your home reduced by (1) and (2). The dollar limits for the second and third categories apply to the combined mortgages on your main home and second home. See Part II for more detailed definitions of grandfathered, home acquisition, and home equity debt. You can use Figure A to check whether your home mortgage interest is fully deductible. Fully deductible interest. In most cases, you can deduct all of your home mortgage interest. How much you can deduct depends on the date of the mortgage, the amount of the mortgage, and how you use the mortgage proceeds. If all of your mortgages fit into one or more of the following three categories at all times during the year, you can deduct all of the interest on those mortgages. (If any one mortgage fits into more than one category, add the debt that fits in each category to your other debt in the same Publication 936 (2017) Figure A. Is My Home Mortgage Interest Fully Deductible? (Instructions: Include balances of ALL mortgages secured by your main home and second home.) Start Here: Do you meet the conditions1 to deduct home mortgage interest? No You can’t deduct the interest payments as home mortgage interest. 4 Yes Were your (or your spouse's if married filing a joint return) total mortgage balances $100,000 or less2 ($50,000 or less if married filing separately) at all times during the year? Yes Your home mortgage interest is fully deductible. You don’t need to read Part II of this publication. No Were all of your home mortgages taken out on or before October 13, 1987? Yes Go to Part II of this publication to determine the limits on your deductible home mortgage interest. No Were all of your home mortgages taken out after October 13, 1987, used to buy, build, or improve the main home secured by that main home mortgage or No used to buy, build, or improve the second home secured by that second home mortgage, or both? Were your (or your spouse's if married filing a joint return) grandfathered debt plus home acquisition debt balances $1,000,000 or less3 Yes ($500,000 or less if married filing separately) at all times during the year? No Yes Yes Were your (or your spouse's if married filing a joint return) mortgage balances $1,000,000 or less ($500,000 or less if married filing separately) at all times during the year? No Were your (or your spouse's if married filing a joint return) home equity debt balances $100,000 or less2 ($50,000 or less if married filing separately) at all times during the year? No Yes 1 You must itemize deductions on Schedule A (Form 1040). The loan must be a secured debt on a qualified home. See Part I, Home Mortgage Interest. 2 If all mortgages on your main or second home exceed the home’s fair market value, a lower limit may apply. See Home equity debt limit under Home Equity Debt in Part II. 3 Amounts over the $1,000,000 limit ($500,000 if married filing separately) may qualify as home equity debt if they aren’t more than the total home equity debt limit. See Part II of this publication for more information about grandfathered debt, home acquisition debt, and home equity debt. 4 See Table 2 in Part II of this publication for where to deduct other types of interest payments. Secured Debt You can deduct your home mortgage interest only if your mortgage is a secured debt. A secured debt is one in which you sign an instrument (such as a mortgage, deed of trust, or land contract) that: Makes your ownership in a qualified home security for payment of the debt, Provides, in case of default, that your home could satisfy the debt, and Publication 936 (2017) Is recorded or is otherwise perfected under any state or local law that applies. In other words, your mortgage is a secured debt if you put your home up as collateral to protect the interests of the lender. If you can't pay the debt, your home can then serve as payment to the lender to satisfy (pay) the debt. In this publication, mortgage will refer to secured debt. cause of a lien on your general assets or if it is a security interest that attaches to the property without your consent (such as a mechanic's lien or judgment lien). A debt isn’t secured by your home if it once was, but is no longer secured by your home. Wraparound mortgage. This isn’t a secured debt unless it is recorded or otherwise perfected under state law. Debt not secured by home. A debt isn’t secured by your home if it is secured solely bePage 3 Example. Beth owns a home subject to a mortgage of $40,000. She sells the home for $100,000 to John, who takes it subject to the $40,000 mortgage. Beth continues to make the payments on the $40,000 note. John pays $10,000 down and gives Beth a $90,000 note secured by a wraparound mortgage on the home. Beth doesn't record or otherwise perfect the $90,000 mortgage under the state law that applies. Therefore, the mortgage isn't a secured debt and John can't deduct any of the interest he pays on it as home mortgage interest. Choice to treat the debt as not secured by your home. You can choose to treat any debt secured by your qualified home as not secured by the home. This treatment begins with the tax year for which you make the choice and continues for all later tax years. You can revoke your choice only with the consent of the Internal Revenue Service (IRS). You may want to treat a debt as not secured by your home if the interest on that debt is fully deductible (for example, as a business expense) whether or not it qualifies as home mortgage interest. This may allow you, if the limits in Part II apply, more of a deduction for interest on other debts that are deductible only as home mortgage interest. Cooperative apartment owner. If you own stock in a cooperative housing corporation, see the Special Rule for Tenant-Stockholders in Cooperative Housing Corporations, near the end of this Part I. Qualified Home For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. This means your main home or your second home. A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities. The interest you pay on a mortgage on a home other than your main or second home may be deductible if the proceeds of the loan were used for business, investment, or other deductible purposes. Otherwise, it is considered personal interest and isn't deductible. Main home. You can have only one main home at any one time. This is the home where you ordinarily live most of the time. Second home. A second home is a home that you choose to treat as your second home. Second home not rented out. If you have a second home that you don’t hold out for rent or resale to others at any time during the year, you can treat it as a qualified home. You don't have to use the home during the year. Second home rented out. If you have a second home and rent it out part of the year, you also must use it as a home during the year for it to be a qualified home. You must use this home more than 14 days or more than 10% of the number of days during the year that the home is rented at a fair rental, whichever is longer. If you don't use the home long enough, it is considered rental property and not a second Page 4 home. For information on residential rental property, see Pub. 527. More than one second home. If you have more than one second home, you can treat only one as the qualified second home during any year. However, you can change the home you treat as a second home during the year in the following situations. If you get a new home during the year, you can choose to treat the new home as your second home as of the day you buy it. If your main home no longer qualifies as your main home, you can choose to treat it as your second home as of the day you stop using it as your main home. If your second home is sold during the year or becomes your main home, you can choose a new second home as of the day you sell the old one or begin using it as your main home. Divided use of your home. The only part of your home that is considered a qualified home is the part you use for residential living. If you use part of your home for other than residential living, such as a home office, you must allocate the use of your home. You must then divide both the cost and fair market value of your home between the part that is a qualified home and the part that isn't. Dividing the cost may affect the amount of your home acquisition debt, which is limited to the cost of your home plus the cost of any improvements. (See Home Acquisition Debt in Part II.) Dividing the fair market value may affect your home equity debt limit, also explained in Part II. Renting out part of home. If you rent out part of a qualified home to another person (tenant), you can treat the rented part as being used by you for residential living only if all of the following conditions apply. The rented part of your home is used by the tenant primarily for residential living. The rented part of your home isn't a self-contained residential unit having separate sleeping, cooking, and toilet facilities. You don't rent (directly or by sublease) the same or different parts of your home to more than two tenants at any time during the tax year. If two persons (and dependents of either) share the same sleeping quarters, they are treated as one tenant. Office in home. If you have an office in your home that you use in your business, see Pub. 587, Business Use of Your Home. It explains how to figure your deduction for the business use of your home, which includes the business part of your home mortgage interest. Home under construction. You can treat a home under construction as a qualified home for a period of up to 24 months, but only if it becomes your qualified home at the time it is ready for occupancy. The 24-month period can start any time on or after the day construction begins. Home destroyed. You may be able to continue treating your home as a qualified home even after it is destroyed in a fire, storm, tornado, earthquake, or other casualty. This means you can continue to deduct the interest you pay on your home mortgage, subject to the limits described in this publication. You can continue treating a destroyed home as a qualified home if, within a reasonable period of time after the home is destroyed, you: Rebuild the destroyed home and move into it, or Sell the land on which the home was located. This rule applies to your main home and to a second home that you treat as a qualified home. Time-sharing arrangements. You can treat a home you own under a time-sharing plan as a qualified home if it meets all the requirements. A time-sharing plan is an arrangement between two or more people that limits each person's interest in the home or right to use it to a certain part of the year. Rental of time-share. If you rent out your time-share, it qualifies as a second home only if you also use it as a home during the year. See Second home rented out, earlier, for the use requirement. To know whether you meet that requirement, count your days of use and rental of the home only during the time you have a right to use it or to receive any benefits from the rental of it. Married taxpayers. If you're married and file a joint return, your qualified home(s) can be owned either jointly or by only one spouse. Separate returns. If you're married filing separately and you and your spouse own more than one home, you can each take into account only one home as a qualified home. However, if you both consent in writing, then one spouse can take both the main home and a second home into account. Special Situations This section describes certain items that can be included as home mortgage interest and others that can't. It also describes certain special situations that may affect your deduction. Late payment charge on mortgage payment. You can deduct as home mortgage interest a late payment charge if it wasn't for a specific service performed in connection with your mortgage loan. Mortgage prepayment penalty. If you pay off your home mortgage early, you may have to pay a penalty. You can deduct that penalty as home mortgage interest provided the penalty isn't for a specific service performed or cost incurred in connection with your mortgage loan. Sale of home. If you sell your home, you can deduct your home mortgage interest (subject to any limits that apply) paid up to, but not including, the date of the sale. Example. John and Peggy Harris sold their home on May 7. Through April 30, they made home mortgage interest payments of $1,220. The settlement sheet for the sale of the home showed $50 interest for the 6-day period in May up to, but not including, the date of sale. Their Publication 936 (2017) mortgage interest deduction is $1,270 ($1,220 + $50). Prepaid interest. If you pay interest in advance for a period that goes beyond the end of the tax year, you must spread this interest over the tax years to which it applies. You can deduct in each year only the interest that qualifies as home mortgage interest for that year. However, there is an exception that applies to points, discussed later. Mortgage interest credit. You may be able to claim a mortgage interest credit if you were issued a mortgage credit certificate (MCC) by a state or local government. Figure the credit on Form 8396, Mortgage Interest Credit. If you take this credit, you must reduce your mortgage interest deduction by the amount of the credit. See Form 8396 and Pub. 530 for more information on the mortgage interest credit. Ministers' and military housing allowance. If you're a minister or a member of the uniformed services and receive a housing allowance that isn't taxable, you can still deduct your home mortgage interest. Hardest Hit Fund and Emergency Homeowners' Loan Programs. You can use a special method to compute your deduction for mortgage interest and real estate taxes on your main home if you meet the following two conditions. 1. You received assistance under: a. A State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest, or b. An Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state. 2. You meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home. If you meet these conditions, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form 1098-MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received from payer(s)/borrower(s)) and box 11 (real property taxes). However, you're not required to use this special method to compute your deduction for mortgage interest and real estate taxes on your main home. Mortgage assistance payments under section 235 of the National Housing Act. If you qualify for mortgage assistance payments for lower-income families under section 235 of the Publication 936 (2017) National Housing Act, part or all of the interest on your mortgage may be paid for you. You can't deduct the interest that is paid for you. mortgage loan generally is subject to the limit on Home Equity Debt discussed in Part II. No other effect on taxes. Don’t include these mortgage assistance payments in your income. Also, don't use these payments to reduce other deductions, such as real estate taxes. Rental payments. If you live in a house before final settlement on the purchase, any payments you make for that period are rent and not interest. This is true even if the settlement papers call them interest. You can't deduct these payments as home mortgage interest. Divorced or separated individuals. If a divorce or separation agreement requires you or your spouse or former spouse to pay home mortgage interest on a home owned by both of you, the payment of interest may be alimony. See the discussion of Payments for jointly-owned home under Alimony in Pub. 504, Divorced or Separated Individuals. Mortgage proceeds invested in tax-exempt securities. You can't deduct the home mortgage interest on grandfathered debt or home equity debt if you used the proceeds of the mortgage to buy securities or certificates that produce tax-free income. “Grandfathered debt” and “home equity debt” are defined in Part II of this publication. Redeemable ground rents. In some states (such as Maryland), you can buy your home subject to a ground rent. A ground rent is an obligation you assume to pay a fixed amount per year on the property. Under this arrangement, you're leasing (rather than buying) the land on which your home is located. If you make annual or periodic rental payments on a redeemable ground rent, you can deduct them as mortgage interest. A ground rent is a redeemable ground rent if all of the following are true. Your lease, including renewal periods, is for more than 15 years. You can freely assign the lease. You have a present or future right (under state or local law) to end the lease and buy the lessor's entire interest in the land by paying a specific amount. The lessor's interest in the land is primarily a security interest to protect the rental payments to which he or she is entitled. Refunds of interest. If you receive a refund of interest in the same tax year you paid it, you must reduce your interest expense by the amount refunded to you. If you receive a refund of interest you deducted in an earlier year, you generally must include the refund in income in the year you receive it. However, you need to include it only up to the amount of the deduction that reduced your tax in the earlier year. This is true whether the interest overcharge was refunded to you or was used to reduce the outstanding principal on your mortgage. If you need to include the refund in income, report it on Form 1040, line 21. If you received a refund of interest you overpaid in an earlier year, you generally will receive a Form 1098, Mortgage Interest Statement, showing the refund in box 4. For information about Form 1098, see Form 1098, Mortgage Interest Statement, later. For more information on how to treat refunds of interest deducted in earlier years, see Recoveries in Pub. 525, Taxable and Nontaxable Income. Payments made to end the lease and to buy the lessor's entire interest in the land aren't deductible as mortgage interest. Nonredeemable ground rents. Payments on a nonredeemable ground rent aren't mortgage interest. You can deduct them as rent if they are a business expense or if they are for rental property. Reverse mortgages. A reverse mortgage is a loan where the lender pays you (in a lump sum, a monthly advance, a line of credit, or a combination of all three) while you continue to live in your home. With a reverse mortgage, you retain title to your home. Depending on the plan, your reverse mortgage becomes due with interest when you move, sell your home, reach the end of a pre-selected loan period, or die. Because reverse mortgages are considered loan advances and not income, the amount you receive isn't taxable. Any interest (including original issue discount) accrued on a reverse mortgage isn't deductible until you actually pay it, which is usually when you pay off the loan in full. Your deduction may be limited because a reverse Cooperative apartment owner. If you own a cooperative apartment, you must reduce your home mortgage interest deduction by your share of any cash portion of a patronage dividend that the cooperative receives. The patronage dividend is a partial refund to the cooperative housing corporation of mortgage interest if paid in a prior year. If you receive a Form 1098 from the cooperative housing corporation, the form should show only the amount you can deduct. SBA disaster home loans. Interest paid on disaster home loans from the Small Business Administration (SBA) is deductible as mortgage interest if the requirements discussed earlier under Home Mortgage Interest are met. Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points. Page 5 Figure B. Are My Points Fully Deductible This Year? Start Here: Is the loan secured by your main home? No Yes Is the payment of points an established business practice in your area? No Yes Were the points paid more than the amount generally charged in your area? Yes No Do you use the cash method of accounting? No Yes Were the points paid in place of amounts that ordinarily are separately stated on the settlement sheet? Yes No Were the funds you provided (other than those you borrowed from your lender or mortgage broker), plus any points the seller paid, at least as much as the points charged?* No Yes Yes Did you take out the loan to improve your main home? No Did you take out the loan to buy or build your main home? No Yes Were the points computed as a percentage of the principal amount of the mortgage? No Yes Is the amount paid clearly shown as points on the settlement statement? No Yes You can fully deduct the points this year on Schedule A (Form 1040). You cannot fully deduct the points this year. See the discussion on Points. * The funds you provided are not required to have been applied to the points. They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. Page 6 Publication 936 (2017) A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. See Points paid by the seller, later. General Rule You generally can't deduct the full amount of points in the year paid. Because they are prepaid interest, you generally deduct them ratably over the life (term) of the mortgage. See Deduction Allowed Ratably, next. For exceptions to the general rule, see Deduction Allowed in Year Paid, later. Deduction Allowed Ratably If you don't meet the tests listed under Deduction Allowed in Year Paid, later, the loan isn't a home improvement loan, or you choose not to deduct your points in full in the year paid, you can deduct the points ratably (equally) over the life of the loan if you meet all the following tests. 1. You use the cash method of accounting. This means you report income in the year you receive it and deduct expenses in the year you pay them. Most individuals use this method. 2. Your loan is secured by a home. (The home doesn't need to be your main home.) 3. Your loan period isn't more than 30 years. 4. If your loan period is more than 10 years, the terms of your loan are the same as other loans offered in your area for the same or longer period. 5. Either your loan amount is $250,000 or less, or the number of points isn't more than: a. 4, if your loan period is 15 years or less, or b. 6, if your loan period is more than 15 years. Example. You use the cash method of accounting. In 2017, you took out a $100,000 loan payable over 20 years. The terms of the loan are the same as for other 20-year loans offered in your area. You paid $4,800 in points. You made 3 monthly payments on the loan in 2017. You can deduct $60 [($4,800 ÷ 240 months) x 3 payments] in 2017. In 2018, if you make all twelve payments, you will be able to deduct $240 ($20 x 12). Deduction Allowed in Year Paid You can fully deduct points in the year paid if you meet all the following tests. (You can use Figure B as a quick guide to see whether your points are fully deductible in the year paid.) 1. Your loan is secured by your main home. (Your main home is the one you ordinarily live in most of the time.) 2. Paying points is an established business practice in the area where the loan was made. 3. The points paid weren't more than the points generally charged in that area. Publication 936 (2017) 4. You use the cash method of accounting. This means you report income in the year you receive it and deduct expenses in the year you pay them. Most individuals use this method. 5. The points weren't paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes. 6. The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. The funds you provided aren't required to have been applied to the points. They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. You can't have borrowed these funds from your lender or mortgage broker. 7. You use your loan to buy or build your main home. 8. The points were computed as a percentage of the principal amount of the mortgage. 9. The amount is clearly shown on the settlement statement (such as the Settlement Statement, Form HUD-1) as points charged for the mortgage. The points may be shown as paid from either your funds or the seller's. Note. If you meet all of these tests, you can choose to either fully deduct the points in the year paid, or deduct them over the life of the loan. Home improvement loan. You can also fully deduct in the year paid points paid on a loan to improve your main home, if tests (1) through (6) are met. Second home. You can't fully deduct in the year paid points you pay on CAUTION loans secured by your second home. You can deduct these points only over the life of the loan. ! Refinancing. Generally, points you pay to refinance a mortgage aren't deductible in full in the year you pay them. This is true even if the new mortgage is secured by your main home. However, if you use part of the refinanced mortgage proceeds to improve your main home and you meet the first 6 tests listed under Deduction Allowed in Year Paid, you can fully deduct the part of the points related to the improvement in the year you paid them with your own funds. You can deduct the rest of the points over the life of the loan. Example 1. In 1998, Bill Fields got a mortgage to buy a home. In 2017, Bill refinanced that mortgage with a 15-year $100,000 mortgage loan. The mortgage is secured by his home. To get the new loan, he had to pay three points ($3,000). Two points ($2,000) were for prepaid interest, and one point ($1,000) was charged for services, in place of amounts that ordinarily are stated separately on the settlement statement. Bill paid the points out of his private funds, rather than out of the proceeds of the new loan. The payment of points is an established practice in the area, and the points charged aren't more than the amount generally charged there. Bill's first payment on the new loan was due July 1. He made six payments on the loan in 2017 and is a cash basis taxpayer. Bill used the funds from the new mortgage to repay his existing mortgage. Although the new mortgage loan was for Bill's continued ownership of his main home, it wasn't for the purchase or improvement of that home. He can't deduct all of the points in 2017. He can deduct two points ($2,000) ratably over the life of the loan. He deducts $67 [($2,000 ÷ 180 months) × 6 payments] of the points in 2017. The other point ($1,000) was a fee for services and isn't deductible. Example 2. The facts are the same as in Example 1, except that Bill used $25,000 of the loan proceeds to improve his home and $75,000 to repay his existing mortgage. Bill deducts 25% ($25,000 ÷ $100,000) of the points ($2,000) in 2017. His deduction is $500 ($2,000 × 25%). Bill also deducts the ratable part of the remaining $1,500 ($2,000 − $500) that must be spread over the life of the loan. This is $50 [($1,500 ÷ 180 months) × 6 payments] in 2017. The total amount Bill deducts in 2017 is $550 ($500 + $50). Special Situations This section describes certain special situations that may affect your deduction of points. Original issue discount. If you don't qualify to either deduct the points in the year paid or deduct them ratably over the life of the loan, or if you choose not to use either of these methods, the points reduce the issue price of the loan. This reduction results in original issue discount, which is discussed in chapter 4 of Pub. 535. Amounts charged for services. Amounts charged by the lender for specific services connected to the loan aren't interest. Examples of these charges are: Appraisal fees, Department of Veteran’s Affairs (VA) funding fees, Mortgage Insurance Premiums, Notary fees, and Preparation costs for the mortgage note or deed of trust. You can't deduct these amounts as points either in the year paid or over the life of the mortgage. Points paid by the seller. The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. Treatment by seller. The seller can't deduct these fees as interest. But they are a selling expense that reduces the amount realized by the seller. See Pub. 523 for information on selling your home. Treatment by buyer. The buyer reduces the basis of the home by the amount of the seller-paid points and treats the points as if he Page 7 or she had paid them. If all the tests under Deduction Allowed in Year Paid, earlier, are met, the buyer can deduct the points in the year paid. If any of those tests aren't met, the buyer deducts the points over the life of the loan. If you need information about the basis of your home, see Pub. 523 or Pub. 530. Funds provided are less than points. If you meet all the tests in Deduction Allowed in Year Paid, earlier, except that the funds you provided were less than the points charged to you (test (6)), you can deduct the points in the year paid, up to the amount of funds you provided. In addition, you can deduct any points paid by the seller. Example 1. When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). You meet all the tests for deducting points in the year paid, except the only funds you provided were a $750 down payment. Of the $1,000 charged for points, you can deduct $750 in the year paid. You spread the remaining $250 over the life of the mortgage. Example 2. The facts are the same as in Example 1, except that the person who sold you your home also paid one point ($1,000) to help you get your mortgage. In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). You spread the remaining $250 over the life of the mortgage. You must reduce the basis of your home by the $1,000 paid by the seller. Excess points. If you meet all the tests in Deduction Allowed in Year Paid, earlier, except that the points paid were more than generally paid in your area (test (3)), you deduct in the year paid only the points that are generally charged. You must spread any additional points over the life of the mortgage. Mortgage ending early. If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. However, if you refinance the mortgage with the same lender, you can't deduct any remaining balance of spread points. Instead, deduct the remaining balance over the term of the new loan. A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. Example. Dan paid $3,000 in points in 2006 that he had to spread out over the 15-year life of the mortgage. He deducts $200 points per year. Through 2017, Dan has deducted $2,200 of the points. Dan prepaid his mortgage in full in 2017. He can deduct the remaining $800 of points in 2017. Limits on deduction. You can't fully deduct points paid on a mortgage that exceeds the limits discussed in Part II. See the Table 1 Instructions for line 10. Form 1098. The mortgage interest statement you receive should show not only the total interest paid during the year, but also your deducti- Page 8 ble points paid during the year. See Form 1098, Mortgage Interest Statement, later. Form 1098, Mortgage Interest Statement If you paid $600 or more of mortgage interest (including certain points) during the year on any one mortgage, you generally will receive a Form 1098 or a similar statement from the mortgage holder. You will receive the statement if you pay interest to a person (including a financial institution or cooperative housing corporation) in the course of that person's trade or business. A governmental unit is a person for purposes of furnishing the statement. The statement for each year should be sent to you by January 31 of the following year. A copy of this form will also be sent to the IRS. The statement will show the total interest you paid during the year, and if you purchased a main home during the year, it also will show the deductible points paid during the year, including seller-paid points. However, it shouldn't show any interest that was paid for you by a government agency. As a general rule, Form 1098 will include only points that you can fully deduct in the year paid. However, certain points not included on Form 1098 also may be deductible, either in the year paid or over the life of the loan. See the earlier discussion of Points to determine whether you can deduct points not shown on Form 1098. Prepaid interest on Form 1098. If you prepaid interest in 2017 that accrued in full by January 15, 2018, this prepaid interest may be included in box 1 of Form 1098. However, you can't deduct the prepaid amount for January 2018 in 2017. (See Prepaid interest, earlier.) You will have to figure the interest that accrued for 2018 and subtract it from the amount in box 1. You will include the interest for January 2018 with other interest you pay for 2018. Refunded interest. If you received a refund of mortgage interest you overpaid in an earlier year, you generally will receive a Form 1098 showing the refund in box 4. See Refunds of interest, earlier. How To Report Deduct the home mortgage interest and points reported to you on Form 1098 on Schedule A (Form 1040), line 10. If you paid more deductible interest to the financial institution than the amount shown on Form 1098, show the larger deductible amount on line 10. Attach a statement to your paper return explaining the difference and print “See attached” next to line 10. Deduct home mortgage interest that wasn't reported to you on Form 1098 on Schedule A (Form 1040), line 11. If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and taxpayer identification number (TIN) on the dotted lines next to line 11. The seller must give you this number and you must give the seller your TIN. A Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Failure to meet any of these requirements may result in a $50 penalty for each failure. The TIN can be either a social security number, an individual taxpayer identification number (issued by the Internal Revenue Service), or an employer identification number. If you can take a deduction for points that weren’t reported to you on Form 1098, deduct those points on Schedule A (Form 1040), line 12. More than one borrower. If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on a mortgage that was for your home, and the other person received a Form 1098 showing the interest that was paid during the year, attach a statement to your return explaining this. Show how much of the interest each of you paid, and give the name and address of the person who received the form. Deduct your share of the interest on Schedule A (Form 1040), line 11, and print “See attached” next to the line. Similarly, if you're the payer of record on a mortgage on which there are other borrowers entitled to a deduction for the interest shown on the Form 1098 you received, deduct only your share of the interest on Schedule A (Form 1040), line 10. Let each of the other borrowers know what his or her share is. Mortgage proceeds used for business or investment. If your home mortgage interest deduction is limited under the rules explained in Part II, but all or part of the mortgage proceeds were used for business, investment, or other deductible activities, see Table 2 near the end of this publication. It shows where to deduct the part of your excess interest that is for those activities. The Table 1 Instructions for line 13 in Part II explain how to divide the excess interest among the activities for which the mortgage proceeds were used. Special Rule for Tenant-Stockholders in Cooperative Housing Corporations A qualified home includes stock in a cooperative housing corporation owned by a tenant-stockholder. This applies only if the tenant-stockholder is entitled to live in the house or apartment because of owning stock in the cooperative. Cooperative housing corporation. This is a corporation that meets all of the following conditions. 1. Has only one class of stock outstanding, 2. Has no stockholders other than those who own the stock that can live in a house, apartment, or house trailer owned or leased by the corporation, 3. Has no stockholders who can receive any distribution out of capital other than on a liquidation of the corporation, and 4. Meets at least one of the following requirements. Publication 936 (2017) a. Receives at least 80% of its gross income for the year in which the mortgage interest is paid or incurred from tenant-stockholders. For this purpose, gross income is all income received during the entire year, including amounts received before the corporation changed to cooperative ownership. b. At all times during the year, at least 80% of the total square footage of the corporation's property is used or available for use by the tenant-stockholders for residential or residential-related use. c. At least 90% of the corporation's expenditures paid or incurred during the year are for the acquisition, construction, management, maintenance, or care of corporate property for the benefit of the tenant-stockholders. Stock used to secure debt. In some cases, you can't use your cooperative housing stock to secure a debt because of either: Restrictions under local or state law, or Restrictions in the cooperative agreement (other than restrictions in which the main purpose is to permit the tenantstockholder to treat unsecured debt as secured debt). However, you can treat a debt as secured by the stock to the extent that the proceeds are used to buy the stock under the allocation of interest rules. See chapter 4 of Pub. 535 for details on these rules. Figuring deductible home mortgage interest. Generally, if you're a tenant-stockholder, you can deduct payments you make for your share of the interest paid or incurred by the cooperative. The interest must be on a debt to buy, build, change, improve, or maintain the cooperative's housing, or on a debt to buy the land. Figure your share of this interest by multiplying the total by the following fraction. Your shares of stock in the cooperative The total shares of stock in the cooperative Limits on deduction. To figure how the limits discussed in Part II apply to you, treat your share of the cooperative's debt as debt incurred by you. The cooperative should determine your share of its grandfathered debt, its home acquisition debt, and its home equity debt. (Your share of each of these types of debt is equal to the average balance of each debt multiplied by the fraction just given.) After your share of the average balance of each type of debt is determined, you include it with the average balance of that type of debt secured by your stock. Form 1098. The cooperative should give you a Form 1098 showing your share of the interest. Use the rules in this publication to determine your deductible mortgage interest. Publication 936 (2017) Part II. Limits on Home Mortgage Interest Deduction This part of the publication discusses the limits on deductible home mortgage interest. These limits apply to your home mortgage interest expense if you have a home mortgage that doesn't fit into any of the three categories listed at the beginning of Part I under Fully deductible interest. Your home mortgage interest deduction is limited to the interest on the part of your home mortgage debt that isn't more than your qualified loan limit. This is the part of your home mortgage debt that is grandfathered debt or that isn't more than the limits for home acquisition debt and home equity debt. Table 1 can help you figure your qualified loan limit and your deductible home mortgage interest. Home Acquisition Debt Home acquisition debt is a mortgage you took out after October 13, 1987, to buy, build, or substantially improve a qualified home (your main or second home). It also must be secured by that home. If the amount of your mortgage is more than the cost of the home plus the cost of any substantial improvements, only the debt that isn't more than the cost of the home plus improvements qualifies as home acquisition debt. The additional debt may qualify as home equity debt (discussed later). Home acquisition debt limit. The total amount you (or your spouse if married filing a joint return) can treat as home acquisition debt at any time on your main home and second home can't be more than $1 million ($500,000 if married filing separately). This limit is reduced (but not below zero) by the amount of your grandfathered debt (discussed later). Debt over this limit may qualify as home equity debt (also discussed later). Refinanced home acquisition debt. Any secured debt you use to refinance home acquisition debt is treated as home acquisition debt. However, the new debt will qualify as home acquisition debt only up to the amount of the balance of the old mortgage principal just before the refinancing. Any additional debt not used to buy, build, or substantially improve a qualified home isn't home acquisition debt, but may qualify as home equity debt (discussed later). ever, if the property later becomes a qualified home, the debt may qualify after that time. Mortgage treated as used to buy, build, or improve home. A mortgage secured by a qualified home may be treated as home acquisition debt, even if you don't actually use the proceeds to buy, build, or substantially improve the home. This applies in the following situations. 1. You buy your home within 90 days before or after the date you take out the mortgage. The home acquisition debt is limited to the home's cost, plus the cost of any substantial improvements within the limit described below in (2) or (3). (See Example 1 later.) 2. You build or improve your home and take out the mortgage before the work is completed. The home acquisition debt is limited to the amount of the expenses incurred within 24 months before the date of the mortgage. 3. You build or improve your home and take out the mortgage within 90 days after the work is completed. The home acquisition debt is limited to the amount of the expenses incurred within the period beginning 24 months before the work is completed and ending on the date of the mortgage. (See Example 2 later.) Example 1. You bought your main home on June 3 for $175,000. You paid for the home with cash you got from the sale of your old home. On July 15, you took out a mortgage of $150,000 secured by your main home. You used the $150,000 to invest in stocks. You can treat the mortgage as taken out to buy your home because you bought the home within 90 days before you took out the mortgage. The entire mortgage qualifies as home acquisition debt because it wasn't more than the home's cost. Example 2. On January 31, John began building a home on the lot that he owned. He used $45,000 of his personal funds to build the home. The home was completed on October 31. On November 21, John took out a $36,000 mortgage that was secured by the home. The mortgage can be treated as used to build the home because it was taken out within 90 days after the home was completed. The entire mortgage qualifies as home acquisition debt because it wasn't more than the expenses incurred within the period beginning 24 months before the home was completed. This is illustrated by Figure C. Mortgage that qualifies later. A mortgage that doesn't qualify as home acquisition debt because it doesn't meet all the requirements may qualify at a later time. For example, a debt that you use to buy your home may not qualify as home acquisition debt because it isn't secured by the home. However, if the debt is later secured by the home, it may qualify as home acquisition debt after that time. Similarly, a debt that you use to buy property may not qualify because the property isn't a qualified home. HowPage 9 Figure C. John Starts Building Home 䊱 Home Completed ($45,000 in Personal Funds Used) 䊱 $36,000 Mortgage Taken Out 䊱 Jan. 31 Oct. 31 Nov. 21 䊲 9 Months (Within 24 Months) 䊲 22 Days (Within 90 Days) Date of the mortgage. The date you take out your mortgage is the day the loan proceeds are disbursed. This is generally the closing date. You can treat the day you apply in writing for your mortgage as the date you take it out. However, this applies only if you receive the loan proceeds within a reasonable time (such as within 30 days) after your application is approved. If a timely application you make is rejected, a reasonable additional time will be allowed to make a new application. Cost of home or improvements. To determine your cost, include amounts paid to acquire any interest in a qualified home or to substantially improve the home. The cost of building or substantially improving a qualified home includes the costs to acquire real property and building materials, fees for architects and design plans, and required building permits. Substantial improvement. An improvement is substantial if it: Adds to the value of your home, Prolongs your home's useful life, or Adapts your home to new uses. Repairs that maintain your home in good condition, such as repainting your home, aren't substantial improvements. However, if you paint your home as part of a renovation that substantially improves your qualified home, you can include the painting costs in the cost of the improvements. Acquiring an interest in a home because of a divorce. If you incur debt to acquire the interest of a spouse or former spouse in a home, because of a divorce or legal separation, you can treat that debt as home acquisition debt. Part of home not a qualified home. To figure your home acquisition debt, you must divide the cost of your home and improvements between the part of your home that is a qualified home and any part that isn't a qualified home. See Divided use of your home under Qualified Home in Part I. Home Equity Debt If you took out a loan for reasons other than to buy, build, or substantially improve your home, it may qualify as home equity debt. In addition, debt you incurred to buy, build, or substantially improve your home, to the extent it is more than Page 10 the home acquisition debt limit (discussed earlier), may qualify as home equity debt. Grandfathered Debt Home equity debt is a mortgage you took out after October 13, 1987, that: Doesn't qualify as home acquisition debt or as grandfathered debt, and Is secured by your qualified home. If you took out a mortgage on your home before October 14, 1987, or you refinanced such a mortgage, it may qualify as grandfathered debt. To qualify, it must have been secured by your qualified home on October 13, 1987, and at all times after that date. How you used the proceeds doesn't matter. Example. You bought your home for cash 10 years ago. You didn't have a mortgage on your home until last year, when you took out a $50,000 loan, secured by your home, to pay for your daughter's college tuition and your father's medical bills. This loan is home equity debt. Home equity debt limit. There is a limit on the amount of debt that can be treated as home equity debt. The total home equity debt on your main home and second home is limited to the smaller of: $100,000 ($50,000 if married filing separately), or The total of each home's fair market value (FMV) reduced (but not below zero) by the amount of its home acquisition debt and grandfathered debt. Determine the FMV and the outstanding home acquisition and grandfathered debt for each home on the date that the last debt was secured by the home. Example. You own one home that you bought in 2003. Its FMV now is $110,000, and the current balance on your original mortgage (home acquisition debt) is $95,000. Bank M offers you a home mortgage loan of 125% of the FMV of the home less any outstanding mortgages or other liens. To consolidate some of your other debts, you take out a $42,500 home mortgage loan [(125% × $110,000) − $95,000] with Bank M. Your home equity debt is limited to $15,000. This is the smaller of: $100,000, the maximum limit, or $15,000, the amount that the FMV of $110,000 exceeds the amount of home acquisition debt of $95,000. Debt higher than limit. Interest on amounts over the home equity debt limit (such as the interest on $27,500 [$42,500 − $15,000] in the preceding example) generally is treated as personal interest and isn't deductible. But if the proceeds of the loan were used for investment, business, or other deductible purposes, the interest may be deductible. If it is, see the Table 1 Instructions for line 13 for an explanation of how to allocate the excess interest. Part of home not a qualified home. To figure the limit on your home equity debt, you must divide the FMV of your home between the part that is a qualified home and any part that isn't a qualified home. See Divided use of your home under Qualified Home in Part I. Fair market value (FMV). This is the price at which the home would change hands between you and a buyer, neither having to sell or buy, and both having reasonable knowledge of all relevant facts. Sales of similar homes in your area, on about the same date your last debt was secured by the home, may be helpful in figuring the FMV. Grandfathered debt isn't limited. All of the interest you paid on grandfathered debt is fully deductible home mortgage interest. However, the amount of your grandfathered debt reduces the $1 million limit for home acquisition debt and the limit based on your home's fair market value for home equity debt. Refinanced grandfathered debt. If you refinanced grandfathered debt after October 13, 1987, for an amount that wasn't more than the mortgage principal left on the debt, then you still treat it as grandfathered debt. To the extent the new debt is more than that mortgage principal, it is treated as home acquisition or home equity debt, and the mortgage is a mixed-use mortgage (discussed later under Average Mortgage Balance in the Table 1 Instructions). The debt must be secured by the qualified home. You treat grandfathered debt that was refinanced after October 13, 1987, as grandfathered debt only for the term left on the debt that was refinanced. After that, you treat it as home acquisition debt or home equity debt, depending on how you used the proceeds. Exception. If the debt before refinancing was like a balloon note (the principal on the debt wasn't amortized over the term of the debt), then you treat the refinanced debt as grandfathered debt for the term of the first refinancing. This term can't be more than 30 years. Example. Chester took out a $200,000 first mortgage on his home in 1986. The mortgage was a 5-year balloon note and the entire balance on the note was due in 1991. Chester refinanced the debt in 1991 with a new 30-year mortgage. The refinanced debt is treated as grandfathered debt for its entire term (30 years). Line-of-credit mortgage. If you had a line-of-credit mortgage on October 13, 1987, and borrowed additional amounts against it after that date, then the additional amounts are either home acquisition debt or home equity debt depending on how you used the proceeds. The balance on the mortgage before you borrowed the additional amounts is grandfathered debt. The newly borrowed amounts aren't grandfathered debt because the funds were borrowed after October 13, 1987. See Average Mortgage Balance in the Table 1 Instructions that follow. Table 1 Instructions Unless you're subject to the overall limit on itemized deductions, you can deduct all of the interest you paid during the year on mortgages secured by your main home or second home in either of the following two situations. All the mortgages are grandfathered debt. The total of the mortgage balances for the entire year is within the limits discussed Publication 936 (2017) Table 1. Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year Keep for Your Records See the Table 1 Instructions. Part I Qualified Loan Limit 1. Enter the average balance of all your grandfathered debt. See line 1 instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. 2. Enter the average balance of all your home acquisition debt. See line 2 instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 3. Enter $1,000,000 ($500,000 if married filing separately) . . . . . . . . . . . . . . . . . . . . . . . . . . 3. 4. Enter the larger of the amount on line 1 or the amount on line 3 . . . . . . . . . . . . . . . . . . . . 4. 5. Add the amounts on lines 1 and 2. Enter the total here . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. 6. Enter the smaller of the amount on line 4 or the amount on line 5 . . . . . . . . . . . . . . . . . . 6. 7. If you have home equity debt, enter the smaller of $100,000 ($50,000 if married filing separately) or your limited amount. See the line 7 instructions for the limit which may apply to you. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. Add the amounts on lines 6 and 7. Enter the total. This is your qualified loan limit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. 8. Part II 9. Deductible Home Mortgage Interest Enter the total of the average balances of all mortgages on all qualified homes. See line 9 instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. If line 8 is less than line 9, go on to line 10. If line 8 is equal to or more than line 9, stop here. All of your interest on all the mortgages included on line 9 is deductible as home mortgage interest on Schedule A (Form 1040). 10. Enter the total amount of interest that you paid. See line 10 instructions . . . . . . . . . . . . 10. 11. Divide the amount on line 8 by the amount on line 9. Enter the result as a decimal amount (rounded to three places) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. 12. Multiply the amount on line 10 by the decimal amount on line 11. Enter the result. This is your deductible home mortgage interest. Enter this amount on Schedule A (Form 1040) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. 13. Subtract the amount on line 12 from the amount on line 10. Enter the result. This isn't home mortgage interest. See line 13 instructions . . . . . . . . . . . . . . . . . . . . . . . . . . 13. earlier under Home Acquisition Debt and Home Equity Debt. In either of those cases, you don't need Table 1. Otherwise, you can use Table 1 to determine your qualified loan limit and deductible home mortgage interest. Fill out only one Table 1 for both your TIP main and second home regardless of how many mortgages you have. Home equity debt only. If all of your mortgages are home equity debt, don't fill in lines 1 through 5. Enter zero on line 6 and complete the rest of Table 1. Publication 936 (2017) Average Mortgage Balance You have to figure the average balance of each mortgage to determine your qualified loan limit. You need these amounts to complete lines 1, 2, and 9 of Table 1. You can use the highest mortgage balances during the year, but you may benefit most by using the average balances. The following are methods you can use to figure your average mortgage balances. However, if a mortgage has more than one category of debt, see Mixed-use mortgages, later, in this section. ×. Average of first and last balance method. You can use this method if all the following apply. You didn't borrow any new amounts on the mortgage during the year. (This doesn't include borrowing the original mortgage amount.) You didn't prepay more than 1 month's principal during the year. (This includes prepayment by refinancing your home or by applying proceeds from its sale.) You had to make level payments at fixed equal intervals on at least a semi-annual basis. You treat your payments as level even if they were adjusted from time to Page 11 time because of changes in the interest rate. 1. To figure your average balance, complete the following worksheet. 1. Enter the balance as of the first day of the year that the mortgage was secured by your qualified home during the year (generally January 1) . . . . . . . . 2. Enter the balance as of the last day of the year that the mortgage was secured by your qualified home during the year (generally December 31) . . . . . 3. Add amounts on lines 1 and 2 .......................... 4. Divide the amount on line 3 by 2. Enter the result . . . . . . . . . . . Interest paid divided by interest rate method. You can use this method if at all times in 2017 the mortgage was secured by your qualified home and the interest was paid at least monthly. Complete the following worksheet to figure your average balance. 1. Enter the interest paid in 2017. Don't include points, mortgage insurance premiums, or any interest paid in 2017 that is for a year after 2017. However, do include interest that is for 2017 but was paid in an earlier year . . . . . . . . . . . . . . . . . . . . . . . . 2. Enter the annual interest rate on the mortgage. If the interest rate varied in 2017, use the lowest rate for the year . . . . . . . . . . . . . . 3. Divide the amount on line 1 by the amount on line 2. Enter the result . . . . . . . . . . . . . . . . . . . . . . . Example. Mr. Blue had a line of credit secured by his main home all year. He paid interest of $2,500 on this loan. The interest rate on the loan was 9% (0.09) all year. His average balance using this method is $27,778, figured as follows. 2. 3. Enter the interest paid in 2017. Don’t include points, mortgage insurance premiums, or any interest paid in 2017 that is for a year after 2017. However, do include interest that is for 2017 but was paid in an earlier year . . . . . . . . . . . . . . . . . . . . . . . $2,500 Enter the annual interest rate on the mortgage. If the interest rate varied in 2017, use the lowest rate for the year . . . . . . . 0.09 Divide the amount on line 1 by the amount on line 2. Enter the result . . . . . . . . . . . . . . . . . . . . . . $27,778 Statements provided by your lender. If you receive monthly statements showing the closing balance or the average balance for the month, you can use either to figure your average balance for the year. You can treat the balance as zero for any month the mortgage wasn't secured by your qualified home. For each mortgage, figure your average balance by adding your monthly closing or average balances and dividing that total by the number of months the home secured by that mortgage was a qualified home during the year. If your lender can give you your average balance for the year, you can use that amount. Example. Ms. Brown had a home equity loan secured by her main home all year. She received monthly statements showing her average balance for each month. She can figure her average balance for the year by adding her monthly average balances and dividing the total by 12. Mixed-use mortgages. A mixed-use mortgage is a loan that consists of more than one of the three categories of debt (grandfathered debt, home acquisition debt, and home equity debt). For example, a mortgage you took out during the year is a mixed-use mortgage if you used its proceeds partly to refinance a mortgage that you took out in an earlier year to buy your home (home acquisition debt) and partly to buy a car (home equity debt). Complete lines 1 and 2 of Table 1 by including the separate average balances of any grandfathered debt and home acquisition debt in your mixed-use mortgage. Don’t use the methods described earlier in this section to figure the average balance of either category. Instead, for each category, use the following method. 1. Figure the balance of that category of debt for each month. This is the amount of the loan proceeds allocated to that category, reduced by your principal payments on the mortgage previously applied to that category. Principal payments on a mixed-use mortgage are applied in full to each category of debt, until its balance is zero, in the following order: a. First, any home equity debt, b. Next, any grandfathered debt, and c. Finally, any home acquisition debt. Page 12 2. Add together the monthly balances figured in (1). 3. Divide the result in (2) by 12. Complete line 9 of Table 1 by including the average balance of the entire mixed-use mortgage, figured under one of the methods described earlier in this section. Example 1. On October 1, 1987, Sharon took out a $1,400,000 mortgage to buy her main home (grandfathered debt). On March 2, 2016, when the home had a fair market value of $1,700,000 and she owed $1,100,000 on the mortgage, Sharon took out a second mortgage for $200,000. She used $180,000 of the proceeds to make substantial improvements to her home (home acquisition debt) and the remaining $20,000 to buy a car (home equity debt). Under the loan agreement, Sharon must make principal payments of $1,000 at the end of each month. During 2016, her principal payments on the second mortgage totaled $10,000. To complete Table 1, line 2, Sharon must figure a separate average balance for the part of her second mortgage that is home acquisition debt. The January and February balances were zero. The March through December balances were all $180,000, because none of her principal payments are applied to the home acquisition debt. (They are all applied to the home equity debt, reducing it to $10,000 [$20,000 − $10,000].) The monthly balances of the home acquisition debt total $1,800,000 ($180,000 × 10). Therefore, the average balance of the home acquisition debt for 2016 was $150,000 ($1,800,000 ÷ 12). Example 2. The facts are the same as in Example 1. In 2017, Sharon's January through October principal payments on her second mortgage are applied to the home equity debt, reducing it to zero. The balance of the home acquisition debt remains $180,000 for each of those months. Because her November and December principal payments are applied to the home acquisition debt, the November balance is $179,000 ($180,000 − $1,000) and the December balance is $178,000 ($180,000 − $2,000). The monthly balances total $2,157,000 [($180,000 × 10) + $179,000 + $178,000]. Therefore, the average balance of the home acquisition debt for 2017 is $179,750 ($2,157,000 ÷ 12). Line 1 Figure the average balance for the current year of each mortgage you had on all qualified homes on October 13, 1987 (grandfathered debt). Add the results together and enter the total on line 1. Include the average balance for the current year for any grandfathered debt part of a mixed-use mortgage. Line 2 Figure the average balance for the current year of each mortgage you took out on all qualified homes after October 13, 1987, to buy, build, or substantially improve the home (home acquisition debt). Add the results together and enter the total on line 2. Include the average balance Publication 936 (2017) for the current year for any home acquisition debt part of a mixed-use mortgage. Line 7 If you have home equity debt, complete line 7. The amount on line 7 can't be more than the smaller of: 1. $100,000 ($50,000 if married filing separately), or 2. The total of each home's fair market value (FMV) reduced (but not below zero) by the amount of its home acquisition debt and grandfathered debt. Determine the FMV and the outstanding home acquisition and grandfathered debt for each home on the date that the last debt was secured by the home. See Home equity debt limit under Home Equity Debt, earlier, for more information about fair market value. Line 9 Figure the average balance for the current year of each outstanding home mortgage. Add the Publication 936 (2017) average balances together and enter the total on line 9. See Average Mortgage Balance, earlier. Note. When figuring the average balance of a mixed-use mortgage, for line 9, determine the average balance of the entire mortgage. Line 10 If you make payments to a financial institution, or to a person whose business is making loans, you should get Form 1098 or a similar statement from the lender. This form will show the amount of interest to enter on line 10. Also include on this line any other interest payments made on debts secured by a qualified home for which you didn't receive a Form 1098. Don't include points on this line. whichever applies. This amount is fully deductible. 3. Subtract the result in item (2) from the amount in item (1). This amount isn't deductible as home mortgage interest. However, if you used any of the loan proceeds for business or investment activities, see the instructions for line 13, next. Line 13 You can't deduct the amount of interest on line 13 as home mortgage interest. If you didn't use any of the proceeds of any mortgage included on line 9 of the worksheet for business, investment, or other deductible activities, then all the interest on line 13 is personal interest. Personal interest isn't deductible. Claiming your deductible points. Figure your deductible points as follows. 1. Figure your deductible points for the current year using the rules explained under Points in Part I. 2. Multiply the amount in item (1) by the decimal amount on line 11. Enter the result on Schedule A (Form 1040), line 10 or 12, Page 13 Table 2. Where To Deduct Your Interest Expense IF you have ... THEN deduct it on ... AND for more information go to ... deductible student loan interest Form 1040, line 33, or Form 1040A, line 18 Pub. 970, Tax Benefits for Education. deductible home mortgage interest and points reported on Form 1098 Schedule A (Form 1040), line 10 this publication (936). deductible home mortgage interest not reported on Form 1098 Schedule A (Form 1040), line 11 this publication (936). deductible points not reported on Form 1098 Schedule A (Form 1040), line 12 this publication (936). deductible investment interest (other than incurred to produce rents or royalties) Schedule A (Form 1040), line 14 Pub. 550, Investment Income and Expenses. deductible business interest (non-farm) Schedule C or C-EZ (Form 1040) Pub. 535. deductible farm business interest Schedule F (Form 1040) Pubs. 225, Farmer's Tax Guide, and 535. deductible interest incurred to produce rents or royalties Schedule E (Form 1040) Pubs. 527 and 535. personal interest not deductible. If you did use all or part of any mortgage proceeds for business, investment, or other deductible activities, the part of the interest on line 13 that is allocable to those activities can be deducted as business, investment, or other deductible expense, subject to any limits that apply. Table 2 shows where to deduct that interest. See Allocation of Interest in chapter 4 of Pub. 535 for an explanation of how to determine the use of loan proceeds. The following two rules describe how to allocate the interest on line 13 to a business or investment activity. If you used all of the proceeds of the mortgages on line 9 for one activity, then all the interest on line 13 is allocated to that activity. In this case, deduct the interest on the form or schedule to which it applies. If you used the proceeds of the mortgages on line 9 for more than one activity, then you can allocate the interest on line 13 among the activities in any manner you select (up to the total amount of interest otherwise allocable to each activity, explained next). You figure the total amount of interest otherwise allocable to each activity by multiplying the amount on line 10 by the following fraction. Amount on line 9 allocated to that activity Total amount on line 9 Example. Don had two mortgages (A and B) on his main home during the entire year. Mortgage A had an average balance of $90,000, and mortgage B had an average balance of $110,000. Page 14 Don determines that the proceeds of mortgage A are allocable to personal expenses for the entire year. The proceeds of mortgage B are allocable to his business for the entire year. Don paid $14,000 of interest on mortgage A and $16,000 of interest on mortgage B. He figures the amount of home mortgage interest he can deduct by using Table 1. Since both mortgages are home equity debt, Don determines that $15,000 of the interest can be deducted as home mortgage interest. The interest Don can allocate to his business is the smaller of: 1. The amount on Table 1, line 13 of the worksheet ($15,000), or 2. The total amount of interest allocable to the business ($16,500), figured by multiplying the amount on line 10 (the $30,000 total interest paid) by the following fraction. $110,000 (the average balance of the mortgage allocated to the business) $200,000 (the total average balance of all mortgages) Because $15,000 is the smaller of items (1) and (2), that is the amount of interest Don can allocate to his business. He deducts this amount on his Schedule C (Form 1040). How To Get Tax Help If you have questions about a tax issue, need help preparing your tax return, or want to download free publications, forms, or instructions, go to IRS.gov and find resources that can help you right away. Preparing and filing your tax return. Find free options to prepare and file your return on IRS.gov or in your local community if you qualify. The Volunteer Income Tax Assistance (VITA) program offers free tax help to people who generally make $54,000 or less, persons with disabilities, the elderly, and limited-English-speaking taxpayers who need help preparing their own tax returns. The Tax Counseling for the Elderly (TCE) program offers free tax help for all taxpayers, particularly those who are 60 years of age and older. TCE volunteers specialize in answering questions about pensions and retirement-related issues unique to seniors. You can go to IRS.gov and click on the Filing tab to see your options for preparing and filing your return which include the following. Free File. Go to IRS.gov/FreeFile. See if you qualify to use brand-name software to prepare and e-file your federal tax return for free. VITA. Go to IRS.gov/VITA, download the free IRS2Go app, or call 1-800-906-9887 to find the nearest VITA location for free tax preparation. TCE. Go to IRS.gov/TCE, download the free IRS2Go app, or call 1-888-227-7669 to find the nearest TCE location for free tax preparation. Getting answers to your tax law questions. On IRS.gov get answers to your tax questions anytime, anywhere. Go to IRS.gov/Help or IRS.gov/LetUsHelp pages for a variety of tools that will help Publication 936 (2017) you get answers to some of the most common tax questions. Go to IRS.gov/ITA for the Interactive Tax Assistant, a tool that will ask you questions on a number of tax law topics and provide answers. You can print the entire interview and the final response for your records. Go to IRS.gov/Pub17 to get Pub. 17, Your Federal Income Tax for Individuals, which features details on tax-saving opportunities, 2017 tax changes, and thousands of interactive links to help you find answers to your questions. View it online in HTML or as a PDF or, better yet, download it to your mobile device to enjoy eBook features. You may also be able to access tax law information in your electronic filing software. Getting tax forms and publications. Go to IRS.gov/Forms to view, download, or print all of the forms and publications you may need. You can also download and view popular tax publications and instructions (including the 1040 instructions) on mobile devices as an eBook at no charge. Or, you can go to IRS.gov/OrderForms to place an order and have forms mailed to you within 10 business days. Using direct deposit. The fastest way to receive a tax refund is to combine direct deposit and IRS e-file. Direct deposit securely and electronically transfers your refund directly into your financial account. Eight in 10 taxpayers use direct deposit to receive their refund. IRS issues more than 90% of refunds in less than 21 days. Delayed refund for returns claiming certain credits. Due to changes in the law, the IRS can’t issue refunds before February 15, 2017, for returns that claim the earned income credit (EIC) or the additional child tax credit (ACTC). This applies to the entire refund, not just the portion associated with these credits. Getting a transcript or copy of a return. The quickest way to get a copy of your tax transcript is to go to IRS.gov/Transcripts. Click on either "Get Transcript Online" or "Get Transcript by Mail" to order a copy of your transcript. If you prefer, you can: Order your transcript by calling 1-800-908-9946. Mail Form 4506-T or Form 4506T-EZ (both available on IRS.gov). Using online tools to help prepare your return. Go to IRS.gov/Tools for the following. The Earned Income Tax Credit Assistant (IRS.gov/EIC) determines if you're eligible for the EIC. The Online EIN Application (IRS.gov/EIN) helps you get an employer identification number. The IRS Withholding Calculator (IRS.gov/ W4app) estimates the amount you should have withheld from your paycheck for federal income tax purposes. The First Time Homebuyer Credit Account Look-up (IRS.gov/HomeBuyer) tool provides information on your repayments and account balance. The Sales Tax Deduction Calculator (IRS.gov/SalesTax) figures the amount you Publication 936 (2017) can claim if you itemize deductions on Schedule A (Form 1040), choose not to claim state and local income taxes, and you didn’t save your receipts showing the sales tax you paid. Resolving tax-related identity theft issues. The IRS doesn’t initiate contact with taxpayers by email or telephone to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. Go to IRS.gov/IDProtection for information and videos. If your SSN has been lost or stolen or you suspect you're a victim of tax-related identity theft, visit IRS.gov/ID to learn what steps you should take. Checking on the status of your refund. Go to IRS.gov/Refunds. Due to changes in the law, the IRS can’t issue refunds before mid-February 2018, for returns that properly claimed the EIC or the ACTC. This applies to the entire refund, not just the portion associated with these credits. Download the official IRS2Go app to your mobile device to check your refund status. Call the automated refund hotline at 1-800-829-1954. Making a tax payment. The IRS uses the latest encryption technology to ensure your electronic payments are safe and secure. You can make electronic payments online, by phone, and from a mobile device using the IRS2Go app. Paying electronically is quick, easy, and faster than mailing in a check or money order. Go to IRS.gov/Payments to make a payment using any of the following options. IRS Direct Pay: Pay your individual tax bill or estimated tax payment directly from your checking or savings account at no cost to you. Debit or credit card: Choose an approved payment processor to pay online, by phone, and by mobile device. Electronic Funds Withdrawal: Offered only when filing your federal taxes using tax preparation software or through a tax professional. Electronic Federal Tax Payment System: Best option for businesses. Enrollment is required. Check or money order: Mail your payment to the address listed on the notice or instructions. Cash: If cash is your only option, you may be able to pay your taxes at a participating retail store. What if I can’t pay now? Go to IRS.gov/ Payments for more information about your options. Apply for an online payment agreement (IRS.gov/OPA) to meet your tax obligation in monthly installments if you can’t pay your taxes in full today. Once you complete the online process, you will receive immediate notification of whether your agreement has been approved. Use the Offer in Compromise Pre-Qualifier (IRS.gov/OIC) to see if you can settle your tax debt for less than the full amount you owe. Checking the status of an amended return. Go to IRS.gov and click on Where’s My Amended Return? (IRS.gov/WMAR) under the “Tools” bar to track the status of Form 1040X amended returns. Please note that it can take up to 3 weeks from the date you mailed your amended return for it show up in our system and processing it can take up to 16 weeks. Understanding an IRS notice or letter. Go to IRS.gov/Notices to find additional information about responding to an IRS notice or letter. Contacting your local IRS office. Keep in mind, many questions can be resolved on IRS.gov without visiting an IRS Tax Assistance Center (TAC). Go to IRS.gov/LetUsHelp for the topics people ask about most. If you still need help, IRS TACs provide tax help when a tax issue can’t be handled online or by phone. All TACs now provide service by appointment so you’ll know in advance that you can get the service you need without waiting. Before you visit, go to IRS.gov/TACLocator to find the nearest TAC, check hours, available services, and appointment options. Or, on the IRS2Go app, under the Stay Connected tab, choose the Contact Us option and click on “Local Offices.” Watching IRS videos. The IRS Video portal (IRSvideos.gov) contains video and audio presentations for individuals, small businesses, and tax professionals. Getting tax information in other languages. For taxpayers whose native language isn’t English, we have the following resources available. Taxpayers can find information on IRS.gov in the following languages. Spanish (IRS.gov/Spanish). Chinese (IRS.gov/Chinese). Vietnamese (IRS.gov/Vietnamese). Korean (IRS.gov/Korean). Russian (IRS.gov/Russian). The IRS TACs provide over-the-phone interpreter service in over 170 languages, and the service is available free to taxpayers. The Taxpayer Advocate Service Is Here To Help You What is the Taxpayer Advocate Service? The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that helps taxpayers and protects taxpayer rights. Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights under the Taxpayer Bill of Rights. What Can the Taxpayer Advocate Service Do For You? We can help you resolve problems that you can’t resolve with the IRS. And our service is free. If you qualify for our assistance, you will be assigned to one advocate who will work with Page 15 you throughout the process and will do everything possible to resolve your issue. TAS can help you if: Your problem is causing financial difficulty for you, your family, or your business, You face (or your business is facing) an immediate threat of adverse action, or You’ve tried repeatedly to contact the IRS but no one has responded, or the IRS hasn’t responded by the date promised. How Can You Reach Us? We have offices in every state, the District of Columbia, and Puerto Rico. Your local advocate’s number is in your local directory and at TaxpayerAdvocate.IRS.gov. You can also call us at 1-877-777-4778. Index How Can You Learn About Your Taxpayer Rights? these broad issues, please report it to us at IRS.gov/SAMS. The Taxpayer Bill of Rights describes 10 basic rights that all taxpayers have when dealing with the IRS. Our Tax Toolkit at TaxpayerAdvocate.IRS.gov can help you understand what these rights mean to you and how they apply. These are your rights. Know them. Use them. Low Income Taxpayer Clinics How Else Does the Taxpayer Advocate Service Help Taxpayers? TAS works to resolve large-scale problems that affect many taxpayers. If you know of one of To help us develop a more useful index, please let us know if you have ideas for index entries. See “Comments and Suggestions” in the “Introduction” for the ways you can reach us. A Acquisition debt 2, 9, 10 Alimony 5 Amortization: Points 7 Appraisal fees 7 Armed forces: Housing allowance 5 Assistance (See Tax help) Average mortgage balance 11 Divorced taxpayers 5, 10 E Emergency Homeowners' Loan Program 5 Equity debt 2, 10 Equity debt only (Table 1) 11 F Fair market value (FMV) 10 Fees: Appraisal 7 B Notaries 7 Borrowers: Points (See Points) More than one 8 Seller-paid points, treatment by Figures (See Tables and figures) Form 1040, Schedule A 8, 14 buyer 7 Form 1040, Schedule C or Business: C-EZ 14 Average mortgage balance, total amount of interest otherwise Form 1040, Schedule E 14 allowable to each activity 13 Form 1040, Schedule F 14 Form 1098 8 Mortgage proceeds used for 8 Form 8396 5 C Clergy: Ministers' and military housing allowance 5 Cooperative housing 4, 5, 8, 9 Cost of home or improvements 10 Credits 5 G Grandfathered debt 2, 10 Ground rents 5 H Hardest Hit Fund Program 5 Home 2 Acquisition debt 2, 9 Construction 4 D Cost of 10 Date of mortgage 10 Destroyed 4 Debt: Divided use 4, 10 Choice to treat as not secured by Equity debt 2, 10 home 4 Equity debt only (Table 1) 11 Grandfathered 2, 10 Fair market value 10 Home acquisition 2, 9 Grandfathered debt 2, 10 Home equity 2, 10 Improvement loan, points 7 Home equity only (Table 1) 11 Main 4 Not secured by home 3 Office in 4 Secured 3 Qualified 4 Deductions 2, 5 Renting out part of 4 Home office 4 Sale of 4 Points 7, 13 Second 4 Deed preparation costs 7 Page 16 Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. To find a clinic near you, visit TaxpayerAdvocate.IRS.gov/LITCmap or see IRS Pub. 4134, Low Income Taxpayer Clinic List. Time-sharing arrangements 4 Housing allowance: Ministers and military 5 I Identity theft 15 Improvements: Cost of 10 Home acquisition debt 9 Points 7 Substantial 10 Interest 2 (See also Mortgage interest) Interest rate method 12 Refunded 5, 8 Where to deduct 14 Investments: Average mortgage balance and total amount of interest allowable 13 Mortgage proceeds used for 5, 8 J Joint returns 4 L Lender mortgage statements 12 Limits: Cooperative housing, mortgage interest deduction 9 Deductibility of points 8 Home acquisition debt 9 Home equity debt 10 Home mortgage interest deduction 9 Qualified loan limit 11 Line 10 8 Line-of-credit mortgage 10 Loans 8, 9 (See also Mortgages) Home improvement, points 7 Qualified loan limit 11 M Married taxpayers 4 Military housing allowance 5 Ministers' housing allowance 5 Missing children, photographs of 1 Mixed-use mortgages 12 Mortgage interest 2 Cooperative housing 9 Credit 5 Fully deductible interest 2 Home mortgage interest 2, 5 How to report 8 Late payment charges 4 Limits on deduction 9 Ministers' and military housing allowance 5 Prepaid interest 5, 8 Prepayment penalty 4 Refunds 5, 8 Sale of home 4 Special situations 4 Statement 8 Where to deduct 14 Worksheet to figure (Table 1) 11 Mortgage Interest Statement 8 Mortgages: Assistance payments (under sec. 235 of National Housing Act) 5 Average balance 11 Date of 10 Ending early 8 Late qualifying 9 Line-of-credit 10 Mixed-use 12 Preparation costs for note or deed of trust 7 Proceeds invested in tax-exempt securities 5 Proceeds used for business 8 Proceeds used for investment 8 Qualified loan limit 11 Refinanced 7, 9, 10 Reverse 5 Statements provided by lender 12 To buy, build, or improve 9 Wraparound 3 Main home 4 Publication 936 (2017) N Nonredeemable ground rents 5 Notary fees 7 O Office in home 4 P Penalties: Mortgage prepayment 4 Points 5–8 Claiming deductible 13 Exception to general rule 7 Excess 8 Funds provided less than 8 General rule 7 Home improvement loans 7 Seller paid 7 Prepaid interest 5, 8 Prepayment penalties 4 Publications (See Tax help) Publication 936 (2017) Q Qualified homes 4 Qualified loan limit: Average mortgage balance 11 Worksheet to figure (Table 1) 11 R Redeemable ground rents 5 Refinancing 7 Grandfathered debt 10 Home acquisition debt 9 Refunds 5, 8 Rent: Nonredeemable ground rents 5 Redeemable ground rents 5 Rental payments 5 Renting of home: Part of 4 Time-sharing arrangements 4 Repairs 10 Reverse Mortgages 5 S Sale of home 4 Second home 4, 7 Secured debt 3 Seller-paid points 7 Separated taxpayers 5 Separate returns 4 Share of Interest 9 Special Method 5 Spouses 4 Statements provided by lender 12 Stock: Cooperative housing 9 T Tables and figures: Deductible home mortgage interest: Fully deductible, determination of (Figure A) 2 How to figure (Table 1) 11 Mortgage to buy, build, or improve home (Figure C) 9 Points (Figure B) 5 Qualified loan limit worksheet (Table 1) 11 Tax credits 5 Tax-exempt securities: Mortgage proceeds invested in 5 Tax help 14 Time-sharing arrangements 4 V Valuation: Fair market value 10 W Worksheets: Deductible home mortgage interest 11 Qualified loan limit 11 Wraparound mortgages 3 Page 17
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