interest deductions

Interest Deduction

A reduction in one's taxable income that comes from expense from certain interest payments. For example, the interest one pays on one's mortgage is tax deductible so as to encourage home ownership. Likewise, interest paid on a margin account is often deductible. The United States government uses interest deductions, among other statutory tax advantages, to encourage behavior it supports without mandating it.

interest deductions

The IRS allows various interest payments on loans secured by real property to be deducted:Some of these deductions are as follows:

• For business loans, 100 percent of the interest paid each year is a deductible expense.
• For homeowners, the interest on up to $1,000,000 of combined primary and secondary residence home mortgage debt can be deducted.
• Home equity line of credit interest is deductible up to the interest attributable to $100,000 of debt.
• Interest on loans to buy stock in a cooperative building are deductible within the same limits as home interest.
• Co-op apartment owners may deduct their pro rata share of mortgage interest on underlying debt on the building.
For more information see Publication 936,“Home Mortgage Interest Deduction,”at the IRS Web site, www.irs.gov.

References in periodicals archive ?
And, nearly half of the 8 million middle-income taxpayers take state and local tax deductions or mortgage interest deductions.
Other options the panel is mulling include significantly reducing the $1 million cap on mortgage interest deductions and eliminating federal deductions for state and local taxes, Breaux said.
According to the FTB, audits of tax returns with large home mortgage interest deductions indicate that many taxpayers and tax practitioners are not complying with the rules regarding debt limitations on the deductibility of home mortgage interest.
You might get an extra month's worth of mortgage interest deductions for 2006 by making your January payment in December," says Sidney Kess, an attorney and CPA in New York.
Square D, claiming that the IRS's position was a flawed interpretation of the regulation, argued that the interest deductions for the two years were legitimate.
Congress also asked us to provide descriptive information on taxpayers' mortgage interest deductions and mortgage interest payments reported on Form 1098, Mortgage Interest Statement.
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The resulting tax reform deal eliminated interest deductions on credit card balances, car loans, and most other kinds of loans.
The IRS concluded in CCA 201151021 that increased interest deductions (due to the IRS's determination that the Sec.
Net interest deductions are estimated to be between $7 million and $8 million.
On the other hand, the transfer of a qualified residence and stock increased the transferee's mortgage interest and investment interest deductions.
The increase in operating expenses and net interest deductions was a result of the expansion of company facilities to accommodate continued growth throughout its service areas.