Today TaxMama hears from Seth in the TaxQuips Forum, with this question. “In order to qualify for my mortgage in 2009, I needed to put down 20% of the purchase price of my house. I only had 5% to put down. Therefore, I got another loan to cover the remaining 15% that I needed to put down. I know that I can deduct the interest on the first mortgage. But can I deduct the interest of this other loan? The primary purpose of the other loan was to get the mortgage.”
If these were the loans to purchase the home, you bet. This is called acquisition debt.
These two loans are a common practice to help buyers avoid the PMI – that mortgage insurance that’s often a costly burden.
Incidentally, if you bought a home in 2009, you probably qualify for the first time homebuyers credit. I hope you managed to get that.
And remember, you can find answers to all kinds of questions about home ownership and other tax issues, free. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]
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