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Federal Tax Forms 1040ez

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Federal Tax Forms 1040ez

Federal tax forms 1040ez 13. Federal tax forms 1040ez   Base de Bienes Table of Contents Introduction Useful Items - You may want to see: Base de CostoBienes Raíces Base AjustadaAumentos a la Base Disminuciones a la Base Base Distinta al CostoBienes Recibidos por Servicios Intercambios Sujetos a Impuestos Conversiones Involuntarias Intercambios no Sujetos a Impuestos Bienes Traspasados de un Cónyuge Bienes Recibidos como Donación Bienes Heredados Bienes de Uso Personal Cambiados a Uso Comercial o de Alquiler Acciones y Bonos Introduction Este capítulo explica cómo calcular la base de bienes. Federal tax forms 1040ez Se divide en las siguientes secciones: Base de costo. Federal tax forms 1040ez Base ajustada. Federal tax forms 1040ez Base distinta al costo. Federal tax forms 1040ez Su base es la cantidad de inversión en bienes para propósitos no sujetos a impuestos. Federal tax forms 1040ez Use la base para calcular las pérdidas o ganancias provenientes de la venta, intercambio u otra enajenación de bienes. Federal tax forms 1040ez Además, use la base para calcular las deducciones por depreciación, amortización, agotamiento y pérdidas fortuitas. Federal tax forms 1040ez Si usa bienes para propósitos tanto comerciales como de inversión y personales, tiene que distribuir la base de acuerdo con el uso. Federal tax forms 1040ez Sólo se puede depreciar la base asignada al uso comercial o de inversión de los bienes. Federal tax forms 1040ez Su base original de los bienes se ajusta (aumenta o disminuye) según ciertos hechos. Federal tax forms 1040ez Por ejemplo, si realiza mejoras a los bienes, aumente la base. Federal tax forms 1040ez Si hace deducciones por depreciación o pérdidas fortuitas, o reclama ciertos créditos, reduzca la base. Federal tax forms 1040ez Mantenga documentación precisa de todos los artículos que afecten la base de sus bienes. Federal tax forms 1040ez Para más información sobre cómo mantener dicha documentación, consulte el capítulo 1 . Federal tax forms 1040ez Useful Items - You may want to see: Publicación 15-B Employer's Tax Guide to Fringe Benefits (Guía tributaria sobre beneficios marginales para empleadores), en inglés 525 Taxable and Nontaxable Income (Ingresos sujetos a impuestos y no sujetos a impuestos), en inglés 535 Business Expenses (Gastos de negocio), en inglés 537 Installment Sales (Ventas a plazos), en inglés 544 Sales and Other Dispositions of Assets (Ventas y otras enajenaciones de activos), en inglés 550 Investment Income and Expenses (Ingresos y gastos de inversión), en inglés 551 Basis of Assets (Base de activos), en inglés 946 How To Depreciate Property (Cómo depreciar los bienes), en inglés Base de Costo La base de los bienes comprados normalmente es el costo de dichos bienes. Federal tax forms 1040ez El costo es la cantidad que usted paga en efectivo, obligaciones de deuda, otros bienes o servicios. Federal tax forms 1040ez Éste también puede incluir cantidades que paga por los siguientes artículos: Impuesto sobre ventas, Flete, Instalación y pruebas, Impuestos sobre artículos de uso y consumo, Honorarios legales y contables (cuando se tienen que capitalizar), Timbres de recaudación de impuestos, Costos de registro e Impuestos sobre bienes raíces (si usted los asume por el vendedor). Federal tax forms 1040ez Además, la base de activos de bienes raíces y de negocios puede incluir otros artículos. Federal tax forms 1040ez Préstamos con intereses bajos o sin intereses. Federal tax forms 1040ez    Si compra bienes con un plan de pago a plazos con bajos intereses o sin intereses, la base de los bienes es el precio de compra establecido menos las cantidades consideradas intereses no establecidos. Federal tax forms 1040ez Por lo general, se tienen intereses no establecidos si la tasa de interés es menor que la tasa federal correspondiente. Federal tax forms 1040ez   Para obtener más información, consulte Unstated Interest and Original Issue Discount (OID) (Intereses no establecidos y descuento de la emisión original (OID, por sus siglas en inglés)) en la Publicación 537, en inglés. Federal tax forms 1040ez Bienes Raíces Los bienes raíces, conocidos también como bienes inmuebles, consisten en tierra y, normalmente, todo lo que esté construido sobre esta tierra, lo que crezca en ella y todo lo instalado en ésta. Federal tax forms 1040ez Si compra bienes raíces, algunos honorarios y otros gastos que usted pague son parte de la base de costo de los bienes. Federal tax forms 1040ez Compra por suma global. Federal tax forms 1040ez   Si compra edificios junto con la tierra por una suma global, asigne la base del costo entre la tierra y los edificios. Federal tax forms 1040ez Asigne el costo según los valores justos de mercado (FMV, por sus siglas en inglés) respectivos de la tierra y los edificios al momento de la compra. Federal tax forms 1040ez Calcule la base de cada uno de los activos multiplicando la suma global por una fracción. Federal tax forms 1040ez El numerador es el valor justo de mercado de dicho activo y el denominador es el valor justo de mercado de los bienes en su totalidad al momento de la compra. Federal tax forms 1040ez    Si no está seguro del valor justo de mercado de la tierra y los edificios, puede asignar la base de dichos bienes conforme a sus valores tasados para propósitos del impuesto sobre bienes raíces. Federal tax forms 1040ez Valor justo de mercado (FMV). Federal tax forms 1040ez   El valor justo de mercado (FMV, por sus siglas en inglés) es el precio por el cual los bienes cambian de propietario entre un comprador y un vendedor, cuando ninguno tiene la obligación de comprar o vender y cuando ambos tienen conocimiento razonable de todo hecho necesario. Federal tax forms 1040ez Las ventas de bienes similares alrededor de la misma fecha pueden ser útiles para calcular el valor justo de mercado de los bienes. Federal tax forms 1040ez Asunción de hipoteca. Federal tax forms 1040ez   Si compra bienes y asume una hipoteca existente sobre los bienes (o si compra bienes sujetos a hipoteca), su base incluye la cantidad que paga por los bienes más la cantidad que se tiene que pagar sobre la hipoteca. Federal tax forms 1040ez Cargos de liquidación. Federal tax forms 1040ez   Su base incluye los cargos de liquidación y los costos de cierre que pagó por comprar los bienes. Federal tax forms 1040ez Un cargo por comprar bienes es un costo que se tiene que pagar aun si compra los bienes en efectivo. Federal tax forms 1040ez No incluya en su base cargos ni costos por obtener un préstamo sobre los bienes. Federal tax forms 1040ez   Los siguientes son algunos de los cargos por liquidación o costos de cierre que puede incluir en la base de los bienes: Cargos por investigación del título de propiedad. Federal tax forms 1040ez Cargos por conexión de servicios públicos. Federal tax forms 1040ez Cargos por trámites legales (incluyendo cargos por la búsqueda del título y la preparación del contrato de compraventa y la escritura). Federal tax forms 1040ez Costos de registro. Federal tax forms 1040ez Cargos por estudios topográficos. Federal tax forms 1040ez Impuestos de traspaso. Federal tax forms 1040ez Seguro de título de la propiedad. Federal tax forms 1040ez Cantidades que adeuda el vendedor y que usted acuerda pagar, como impuestos o intereses atrasados, costos de registro y cargos hipotecarios, cargos por mejoras o reparaciones y comisiones por ventas. Federal tax forms 1040ez   Los costos de liquidación no incluyen cantidades puestas en depósito para el pago futuro de gastos como impuestos y seguro. Federal tax forms 1040ez   Los siguientes son algunos de los cargos por liquidación y costos de cierre que no puede incluir en la base de los bienes: Primas de un seguro contra hechos fortuitos. Federal tax forms 1040ez Alquiler por ocupación de la propiedad antes del cierre. Federal tax forms 1040ez Cargos por servicios públicos u otros servicios relacionados con la ocupación de la propiedad antes del cierre. Federal tax forms 1040ez Cargos relacionados con la obtención de un préstamo, tales como puntos (puntos de descuento, costos originarios del préstamo), primas de seguro hipotecario, cargos por asunción del préstamo, costo de un informe de crédito y cargos por una tasación que sea requisito del prestamista. Federal tax forms 1040ez Cargos por refinanciamiento de una hipoteca. Federal tax forms 1040ez Impuestos sobre bienes raíces. Federal tax forms 1040ez   Si paga los impuestos sobre bienes raíces que el vendedor adeudaba sobre los bienes raíces que usted compró y el vendedor no se los reembolsa, considere estos impuestos como parte de su base. Federal tax forms 1040ez No puede deducirlos como gasto. Federal tax forms 1040ez    Si le reembolsa al vendedor los impuestos que éste pagó por usted, normalmente puede deducir la cantidad como gasto en el año de la compra. Federal tax forms 1040ez No incluya esta cantidad en la base de bienes. Federal tax forms 1040ez Si no se los reembolsa al vendedor, tiene que restar esos impuestos de su base. Federal tax forms 1040ez Puntos. Federal tax forms 1040ez   Si paga puntos para obtener un préstamo (incluyendo una hipoteca, una segunda hipoteca, una línea de crédito o un préstamo sobre el valor neto de la vivienda), no sume los puntos a la base de los bienes correspondientes. Federal tax forms 1040ez Normalmente, los puntos se deducen a lo largo del plazo del préstamo. Federal tax forms 1040ez Para más información sobre cómo deducir puntos, consulte el capítulo 23 . Federal tax forms 1040ez Puntos de hipoteca de vivienda. Federal tax forms 1040ez   Le pueden corresponder reglas especiales sobre los puntos que usted y el vendedor paguen cuando usted obtenga una hipoteca para comprar su vivienda principal. Federal tax forms 1040ez Si se cumplen ciertos requisitos, puede deducir los puntos en su totalidad para el año en que se pagaron. Federal tax forms 1040ez Reduzca la base de su vivienda por los puntos que pagó el vendedor. Federal tax forms 1040ez Base Ajustada Antes de calcular las pérdidas o ganancias de una venta, intercambio u otra enajenación de bienes o de calcular la depreciación, agotamiento o amortización permisibles, por regla general, tiene que realizar ciertos ajustes (aumentos o disminuciones) a la base del costo o base distinta al costo (explicadas más adelante) de los bienes. Federal tax forms 1040ez El resultado de estos ajustes a la base es la base ajustada. Federal tax forms 1040ez Aumentos a la Base Aumente la base de los bienes por todos los artículos correctamente sumados a una cuenta de capital. Federal tax forms 1040ez Ejemplos de artículos que aumentan la base se encuentran en la Tabla 13-1. Federal tax forms 1040ez Algunos de estos artículos se explican a continuación. Federal tax forms 1040ez Mejoras. Federal tax forms 1040ez   Sume a su base de los bienes el costo de las mejoras que tengan vida útil de más de 1 año, si éstas aumentan el valor de los bienes, prolongan su vida útil o los adaptan para un uso diferente. Federal tax forms 1040ez Por ejemplo, las mejoras incluyen la instalación de una sala de recreación en un sótano no terminado, la construcción de un baño o dormitorio adicional, la colocación de una cerca, la instalación de nueva plomería o cableado, la instalación de un nuevo tejado o la pavimentación de la entrada de autos. Federal tax forms 1040ez Gravámenes por mejoras locales. Federal tax forms 1040ez   Sume a la base de los bienes los cargos por mejoras como calles y aceras o banquetas, si éstas aumentan el valor de los bienes. Federal tax forms 1040ez No deduzca dichos cargos como impuestos. Federal tax forms 1040ez Sin embargo, puede deducir como impuestos los cargos por mantenimiento, reparaciones o cargos de intereses relacionados con las mejoras. Federal tax forms 1040ez Ejemplo. Federal tax forms 1040ez El ayuntamiento transforma la calle ubicada frente a su tienda en un paseo peatonal y le tasa un gravamen a la propiedad de usted y a las de otros propietarios afectados por el costo del cambio de la calle. Federal tax forms 1040ez Sume dicho cargo a la base de sus bienes. Federal tax forms 1040ez En este ejemplo, el cargo es un activo depreciable. Federal tax forms 1040ez Disminuciones a la Base Reduzca la base de bienes por todo lo que represente un rendimiento de capital en el período durante el cual tuvo los bienes. Federal tax forms 1040ez Los ejemplos de artículos que reducen la base se encuentran en la Tabla 13-1. Federal tax forms 1040ez Algunos de estos artículos se explican a continuación. Federal tax forms 1040ez Tabla 13-1. Federal tax forms 1040ez Ejemplos de Ajustes a la Base Aumentos a la Base Disminuciones a la Base • Mejoras de capital: • Exclusión en los ingresos de subsidios  por sistemas de ahorro de energía   Ampliación de la vivienda     Instalación de un tejado completo     Pavimentación de la entrada de autos • Deducciones por pérdidas fortuitas o  por robo y reembolsos de seguros   Instalación de aire acondicionado central     Cambio del cableado en la vivienda         • Gravámenes por mejoras locales: • Ganancia aplazada de la venta de una  vivienda   Conexiones de agua     Extensión de cables de servicios públicos   hasta la propiedad • Crédito por vehículos con motor  alternativo (Formulario 8910)   Banquetas o aceras     Calles       • Crédito por bienes para recargar  vehículos de combustible alternativo   (Formulario 8911)             • Pérdidas por hechos fortuitos:  Restauración de bienes dañados   • Créditos por energía eficaz  residencial (Formulario 5695)         • Depreciación y deducción conforme a  la sección 179       • Honorarios legales: • Distribuciones de sociedades  anónimas no sujetos a impuestos   Costo de defender y perfeccionar un título   de propiedad     Honorarios por obtener la reducción de un   gravamen del ayuntamiento • Determinadas deudas canceladas  excluidas de los ingresos       • Costos de zonificación • Servidumbres (derechos de acceso  a la propiedad)         • Beneficios tributarios por adopción Pérdidas por hecho fortuito y robo. Federal tax forms 1040ez   Si tiene pérdidas por hecho fortuito o por robo, reste de la base de los bienes el dinero del seguro u otros reembolsos y las pérdidas deducibles no cubiertas por el seguro. Federal tax forms 1040ez    Tiene que aumentar la base de los bienes por la cantidad que gaste en reparaciones que restauren los bienes a su condición previa al hecho fortuito. Federal tax forms 1040ez   Para obtener más información acerca de las pérdidas fortuitas y por robo, consulte el capítulo 25 . Federal tax forms 1040ez Depreciación y deducción conforme a la sección 179. Federal tax forms 1040ez   Reste de la base de la propiedad comercial calificada las deducciones que haya declarado conforme a la sección 179 y la depreciación que haya deducido, o pudo haber deducido (incluyendo todo descuento especial por depreciación), en la declaración de impuestos según el método de depreciación que seleccionó. Federal tax forms 1040ez   Para obtener más información acerca de la depreciación y la deducción conforme a la sección 179, consulte la Publicación 946 y las Instrucciones del Formulario 4562, ambas en inglés. Federal tax forms 1040ez Ejemplo. Federal tax forms 1040ez Usted fue propietario de un dúplex usado como vivienda de alquiler que le costó $40,000, de los cuales $35,000 fueron asignados al edificio y $5,000 al terreno. Federal tax forms 1040ez Hizo una ampliación al dúplex que costó $10,000. Federal tax forms 1040ez En febrero del año pasado, el dúplex sufrió daños por un incendio. Federal tax forms 1040ez Hasta ese momento, usted había descontado una depreciación de $23,000. Federal tax forms 1040ez Vendió algunos materiales rescatados del siniestro por $1,300 y cobró $19,700 de la compañía de seguros. Federal tax forms 1040ez Dedujo una pérdida fortuita de $1,000 en su declaración de impuestos sobre el ingreso del año pasado. Federal tax forms 1040ez Gastó $19,000 del dinero del seguro para la restauración del dúplex, que se completó este año. Federal tax forms 1040ez Tiene que usar la base ajustada del dúplex después de la restauración para determinar la depreciación para el resto del período de recuperación de la propiedad. Federal tax forms 1040ez Calcule la base ajustada del dúplex de la siguiente manera: Costo original del dúplex $35,000 Ampliación hecha al dúplex 10,000 Costo total del dúplex $45,000 Menos: Depreciación 23,000 Base ajustada antes del hecho fortuito $22,000 Menos: Dinero del seguro $19,700     Pérdida fortuita deducida 1,000     Materiales rescatados 1,300 22,000 Base ajustada después del hecho fortuito $-0- Sume: Costo de restauración del dúplex 19,000 Base ajustada después de la restauración $19,000 Nota: La base del terreno es el costo original de $5,000. Federal tax forms 1040ez Servidumbres (derechos de acceso a la propiedad). Federal tax forms 1040ez   La cantidad recibida por otorgar una servidumbre normalmente se considera ganancia de la venta de una participación en bienes raíces. Federal tax forms 1040ez Esto reduce la base de la parte afectada de los bienes. Federal tax forms 1040ez Si la cantidad recibida es mayor que la base de la parte de la propiedad afectada por la servidumbre, reduzca su base de esa parte a cero y considere el remanente como una ganancia reconocida. Federal tax forms 1040ez   Si la ganancia es sobre bienes de capital, consulte el capítulo 16 para obtener más información acerca de cómo declararla. Federal tax forms 1040ez Si la ganancia es sobre bienes usados en una ocupación o negocio, consulte la Publicación 544, en inglés, para obtener información acerca de cómo declararla. Federal tax forms 1040ez Exclusión de subsidios por sistemas de ahorro de energía. Federal tax forms 1040ez   Puede excluir del ingreso bruto todo subsidio recibido de una compañía de servicios públicos por la compra o instalación de un sistema de ahorro de energía para una vivienda. Federal tax forms 1040ez De la base de los bienes para los cuales recibió el subsidio, reste la cantidad excluida. Federal tax forms 1040ez Para obtener más información acerca de este subsidio, consulte el capítulo 12 . Federal tax forms 1040ez Ganancia aplazada de la venta de una vivienda. Federal tax forms 1040ez    Si aplazó la ganancia de la venta de su vivienda principal según las reglas en vigencia antes del 7 de mayo de 1997, tiene que restar la ganancia aplazada de la base de la vivienda que adquirió como reposición. Federal tax forms 1040ez Para obtener más información acerca de las reglas sobre la venta de una vivienda, vea el capítulo 15 . Federal tax forms 1040ez Base Distinta al Costo En muchas ocasiones, no puede usar el costo como base. Federal tax forms 1040ez En estos casos, se puede usar el valor justo de mercado o la base ajustada de los bienes. Federal tax forms 1040ez El valor justo de mercado y la base ajustada se explican en secciones anteriores. Federal tax forms 1040ez Bienes Recibidos por Servicios Si recibe bienes por sus servicios, incluya el valor justo de mercado de dichos bienes en los ingresos. Federal tax forms 1040ez La cantidad que incluye en los ingresos es la base. Federal tax forms 1040ez Si los servicios se prestaron por un precio acordado con anticipación, éste se aceptará como el valor justo de mercado de los bienes si no existen pruebas de lo contrario. Federal tax forms 1040ez Bienes restringidos. Federal tax forms 1040ez   Si recibe bienes por sus servicios y los bienes están sujetos a ciertas restricciones, la base de los bienes es el valor justo de mercado en el momento en que estén sustancialmente establecidos sus derechos a dichos bienes. Federal tax forms 1040ez Sin embargo, esta regla no corresponde si elige incluir en los ingresos el valor justo de mercado de los bienes en el momento en que se le traspasen dichos bienes, menos la cantidad que pagó por éstos. Federal tax forms 1040ez Su derecho sobre esos bienes están sustancialmente establecidos cuando dichos bienes se pueden traspasar o cuando no están sujetos a un riesgo importante de pérdida (es decir, usted tiene pocas probabilidades de perderlos). Federal tax forms 1040ez Para obtener más información, consulte Restricted Property (Bienes restringidos) en la Publicación 525, en inglés. Federal tax forms 1040ez Compra por valor inferior. Federal tax forms 1040ez   Una compra por valor inferior es una compra de un artículo por un valor menor que su valor justo de mercado. Federal tax forms 1040ez Si, como compensación por servicios, compra productos u otros bienes por un valor menor al valor justo de mercado, incluya en su ingreso la diferencia entre el precio de compra y el valor justo de mercado de los bienes. Federal tax forms 1040ez La base de los bienes es el valor justo de mercado (precio de compra más la cantidad que se incluye en los ingresos). Federal tax forms 1040ez   Si la diferencia entre el precio de compra y el valor justo de mercado es un descuento al empleado, no incluya la diferencia en los ingresos. Federal tax forms 1040ez Sin embargo, la base de los bienes sigue siendo el valor justo de mercado. Federal tax forms 1040ez Consulte Employee Discounts (Descuentos del empleado) en la Publicación 15-B, en inglés. Federal tax forms 1040ez Intercambios Sujetos a Impuestos Un intercambio sujeto a impuestos es aquel intercambio en el que la ganancia está sujeta a impuestos o la pérdida es deducible. Federal tax forms 1040ez Una ganancia sujeta a impuestos o pérdida deducible también se conoce como ganancia o pérdida reconocida. Federal tax forms 1040ez Si recibe bienes como intercambio por otros bienes a través de un intercambio sujeto a impuestos, normalmente la base de los bienes que recibe es el valor justo de mercado al momento del intercambio. Federal tax forms 1040ez Conversiones Involuntarias Si recibe bienes de reposición como resultado de una conversión involuntaria, tal como un hecho fortuito, robo o expropiación forzosa, calcule la base de los bienes de reposición usando la base de los bienes convertidos. Federal tax forms 1040ez Bienes similares o afines. Federal tax forms 1040ez   Si recibe bienes de reposición similares o afines en servicio o uso a los bienes convertidos, la base de los bienes de reposición es la misma que la base de los bienes convertidos en la fecha de la conversión, con los siguientes ajustes: Reduzca la base por lo siguiente: Toda pérdida que reconozca en la conversión involuntaria. Federal tax forms 1040ez Todo dinero que reciba y que no gaste en bienes afines. Federal tax forms 1040ez Aumente la base por lo siguiente: Toda ganancia que reconozca en la conversión involuntaria. Federal tax forms 1040ez Todo costo de adquisición de los bienes de reposición. Federal tax forms 1040ez Dinero o bienes no similares ni afines. Federal tax forms 1040ez    Si recibe dinero o bienes no similares o no afines en servicio o uso a los bienes convertidos y compra bienes de reposición similares o afines en servicio o uso a los bienes convertidos, la base de los bienes de reposición es el costo menos la ganancia no reconocida en la conversión. Federal tax forms 1040ez Ejemplo. Federal tax forms 1040ez El estado expropió sus bienes. Federal tax forms 1040ez La base ajustada de los bienes era $26,000 y el estado le pagó $31,000 por éstos. Federal tax forms 1040ez Usted obtuvo una ganancia de $5,000 ($31,000 − $26,000). Federal tax forms 1040ez Por $29,000 compró bienes de reposición similares en uso a los bienes convertidos. Federal tax forms 1040ez Obtiene una ganancia de $2,000 ($31,000 − $29,000), la parte no gastada del pago que recibió del estado. Federal tax forms 1040ez Su ganancia no reconocida es $3,000, la diferencia entre los $5,000 de ganancia obtenida y los $2,000 de ganancia reconocida. Federal tax forms 1040ez La base de los bienes de reposición se calcula de la siguiente manera: Costo de los bienes de reposición $29,000 Menos: Ganancia no reconocida 3,000 Base de los bienes de reposición $26,000 Cómo distribuir la base. Federal tax forms 1040ez   Si compra más de una propiedad de reposición, distribuya la base entre los bienes de acuerdo con los costos respectivos. Federal tax forms 1040ez Base de depreciación. Federal tax forms 1040ez   Hay reglas especiales para determinar y depreciar la base de los bienes MACRS (Sistema modificado de recuperación acelerada de costos) adquiridos en una conversión involuntaria. Federal tax forms 1040ez Para información, vea What Is the Basis of Your Depreciable Property? (¿Cuál es la base de los bienes depreciables?), en el capítulo 1 de la Publicación 946, en inglés. Federal tax forms 1040ez Intercambios no Sujetos a Impuestos Un intercambio no sujeto a impuestos es aquel intercambio en el que no se gravan las ganancias y no se pueden deducir las pérdidas. Federal tax forms 1040ez Si recibe bienes por intercambio no sujetos a impuestos, normalmente la base es la misma que la base de los bienes que traspasó. Federal tax forms 1040ez Consulte Canjes no Sujetos a Impuestos en el capítulo 14. Federal tax forms 1040ez Intercambios de Bienes del Mismo Tipo El intercambio de bienes del mismo tipo es la clase más común de intercambio no sujeto a impuestos. Federal tax forms 1040ez Para considerarse intercambio de bienes del mismo tipo, tanto los bienes canjeados como los bienes recibidos tienen que ser los siguientes: Bienes calificados. Federal tax forms 1040ez Bienes del mismo tipo. Federal tax forms 1040ez La base de los bienes que recibe normalmente es la misma que la base ajustada de los bienes que traspase. Federal tax forms 1040ez Si canjea los bienes en un intercambio de bienes del mismo tipo y también paga dinero, la base de los bienes recibidos es la base ajustada de los bienes que entregó más el dinero que pagó. Federal tax forms 1040ez Bienes calificados. Federal tax forms 1040ez   En un intercambio de bienes del mismo tipo, tiene que mantener para inversión o uso productivo en su ocupación o negocio tanto los bienes que traspase como los bienes que reciba. Federal tax forms 1040ez Bienes del mismo tipo. Federal tax forms 1040ez   Tiene que haber un intercambio de bienes del mismo tipo. Federal tax forms 1040ez Los bienes del mismo tipo son bienes de la misma naturaleza o carácter, aun si son de grado o calidad diferente. Federal tax forms 1040ez El intercambio de bienes raíces por bienes raíces, o de bienes muebles por bienes muebles similares, es un intercambio de bienes del mismo tipo. Federal tax forms 1040ez Ejemplo. Federal tax forms 1040ez Usted canjea un camión viejo que usó en su negocio con una base ajustada de $1,700 por un camión nuevo que tiene un costo de $6,800. Federal tax forms 1040ez El concesionario le hace un descuento de $2,000 por el camión viejo y usted paga $4,800. Federal tax forms 1040ez Esto es un ejemplo de un intercambio de bienes del mismo tipo. Federal tax forms 1040ez La base del camión nuevo es $6,500 (la base ajustada del camión viejo, $1,700, más la cantidad que pagó, $4,800). Federal tax forms 1040ez Si vende el camión viejo a un tercero por $2,000, en lugar de hacer un canje y luego comprar un camión nuevo a un concesionario, usted tiene una ganancia sujeta a impuestos de $300 sobre la venta (el precio de venta de $2,000 menos la base ajustada de $1,700). Federal tax forms 1040ez La base del camión nuevo es el precio que paga al concesionario. Federal tax forms 1040ez Intercambios parcialmente no sujetos a impuestos. Federal tax forms 1040ez   Un intercambio parcialmente no sujeto a impuestos es un intercambio en el que usted recibe bienes que no son del mismo tipo o dinero, además de bienes del mismo tipo. Federal tax forms 1040ez La base de los bienes que recibe es igual a la base ajustada total de los bienes que traspasó, con los siguientes ajustes: Reduzca la base por lo siguiente: Todo el dinero que reciba. Federal tax forms 1040ez Todas las pérdidas que reconozca en el intercambio. Federal tax forms 1040ez Aumente la base por lo siguiente: Todos los costos adicionales en los que incurra. Federal tax forms 1040ez Todas las ganancias que reconozca en el intercambio. Federal tax forms 1040ez Si la otra parte implicada en el intercambio asume las deudas que le pertenecen a usted, trate la asunción de deuda como dinero que usted recibió en el intercambio. Federal tax forms 1040ez Asignación de la base. Federal tax forms 1040ez   Si recibe tanto bienes del mismo tipo como bienes que no son del mismo tipo en el intercambio, asigne la base primero a los bienes que no sean del mismo tipo, excepto dinero, hasta su valor justo de mercado en la fecha del intercambio. Federal tax forms 1040ez El resto es la base de los bienes del mismo tipo. Federal tax forms 1040ez Información adicional. Federal tax forms 1040ez   Para obtener más información, consulte Like-Kind Exchanges (Intercambios de bienes del mismo tipo) en el capítulo 1 de la Publicación 544, en inglés. Federal tax forms 1040ez Base de depreciación. Federal tax forms 1040ez   Hay reglas especiales para determinar y depreciar la base de los bienes MACRS adquiridos en un intercambio de bienes del mismo tipo. Federal tax forms 1040ez Para información, vea What Is the Basis of Your Depreciable Property? (¿Cuál es la base de los bienes depreciables?), en el capítulo 1 de la Publicación 946, en inglés. Federal tax forms 1040ez Bienes Traspasados de un Cónyuge La base de los bienes traspasados a usted o traspasados en fideicomiso para su beneficio por su cónyuge es la misma base que la base ajustada de su cónyuge. Federal tax forms 1040ez Se aplica la misma regla a un traspaso efectuado por su ex cónyuge en relación con su divorcio. Federal tax forms 1040ez Sin embargo, para bienes traspasados en fideicomiso, ajuste la base según las ganancias reconocidas por su cónyuge o ex cónyuge si las obligaciones asumidas, más las obligaciones a las que están sujetos los bienes, son mayores que la base ajustada de los bienes traspasados. Federal tax forms 1040ez Si los bienes que le son traspasados son bonos de ahorros estadounidenses de la serie E, serie EE o serie I, el cesionario tiene que incluir en el ingreso los intereses devengados a la fecha del traspaso. Federal tax forms 1040ez Su base en los bonos, inmediatamente después del traspaso, es igual a la base del cesionario más el ingreso de intereses que se pueda incluir en el ingreso del cesionario. Federal tax forms 1040ez Para obtener más información acerca de estos bonos, consulte el capítulo 7 . Federal tax forms 1040ez Al momento del traspaso, el cesionario tiene que entregarle la documentación necesaria para determinar la base ajustada y el período de tenencia de los bienes a partir de la fecha de traspaso. Federal tax forms 1040ez Para obtener más información acerca del traspaso de bienes de un cónyuge, consulte el capítulo 14 . Federal tax forms 1040ez Bienes Recibidos como Donación Para calcular la base de una propiedad recibida como donación, tiene que conocer la base ajustada del donante justo antes de la donación, el valor justo de mercado de esta propiedad al momento en que se dona y los impuestos sobre donaciones pagados por dicha propiedad. Federal tax forms 1040ez Valor justo de mercado menor que la base ajustada del donante. Federal tax forms 1040ez   Si el valor justo de mercado de los bienes al momento de la donación es menor que la base ajustada del donante, la base depende de si usted tiene ganancias o pérdidas cuando enajene los bienes. Federal tax forms 1040ez Su base para calcular ganancias es la misma que la base ajustada del donante más o menos los ajustes requeridos a la base mientras usted tenía los bienes. Federal tax forms 1040ez Su base para calcular pérdidas es el valor justo de mercado cuando recibió la donación más o menos los ajustes requeridos a la base mientras usted tenía los bienes. Federal tax forms 1040ez Vea Base Ajustada , anteriormente. Federal tax forms 1040ez Ejemplo. Federal tax forms 1040ez Usted recibió un acre de terreno como donación. Federal tax forms 1040ez Al momento de la donación, el terreno tenía un valor justo de mercado de $8,000. Federal tax forms 1040ez La base ajustada del donante era $10,000. Federal tax forms 1040ez Después de recibir los bienes, no sucedió nada que aumentara ni disminuyera la base de los mismos. Federal tax forms 1040ez Si posteriormente usted vende los bienes por $12,000, tendrá una ganancia de $2,000 porque tiene que usar la base ajustada del donante al momento de la donación ($10,000) como base para calcular la ganancia. Federal tax forms 1040ez Si vende los bienes por $7,000, tendrá una pérdida de $1,000 porque tiene que usar el valor justo de mercado al momento de la donación ($8,000) como base para calcular la pérdida. Federal tax forms 1040ez Si el precio de venta está entre $8,000 y $10,000, no tiene ganancias ni pérdidas. Federal tax forms 1040ez Bienes comerciales. Federal tax forms 1040ez   Si mantiene la donación como bienes comerciales, su base para calcular deducciones por depreciación, agotamiento o amortización es la misma que la base del donante más o menos los ajustes requeridos a la base mientras usted tiene los bienes. Federal tax forms 1040ez Valor justo de mercado igual o mayor que la base ajustada del donante. Federal tax forms 1040ez   Si el valor justo de mercado de los bienes es igual o mayor que la base ajustada del donante, la base es la base ajustada del donante al momento en que usted recibió la donación. Federal tax forms 1040ez Aumente la base por la totalidad o parte de los impuestos sobre donaciones pagados, según la fecha de donación, como se explica más adelante. Federal tax forms 1040ez   Además, para calcular las pérdidas o ganancias de una venta u otra enajenación o para calcular deducciones por depreciación, agotamiento o amortización sobre bienes comerciales, tiene que aumentar o reducir la base (la base ajustada del donante) por los ajustes requeridos a la base mientras usted tuvo los bienes. Federal tax forms 1040ez Vea Base Ajustada , anteriormente. Federal tax forms 1040ez   Si recibió una donación durante el año tributario, aumente la base de la donación (la base ajustada del donante) por la parte del impuesto sobre donaciones pagado sobre esta donación debido al aumento neto en valor de la donación. Federal tax forms 1040ez Calcule el aumento multiplicando el impuesto pagado sobre la donación por la siguiente fracción. Federal tax forms 1040ez El numerador de la fracción es el aumento neto del valor de la donación y el denominador es la cantidad de la donación. Federal tax forms 1040ez   El aumento neto del valor de la donación es el valor justo de mercado de la donación menos la base ajustada del donante. Federal tax forms 1040ez La cantidad de la donación es el valor para fines del impuesto sobre la donación después de haber sido reducida por toda exclusión anual y deducción conyugal o caritativa que corresponda a la donación. Federal tax forms 1040ez Ejemplo. Federal tax forms 1040ez En el año 2013, usted recibió una donación de bienes de su madre que tenía un valor justo de mercado de $50,000. Federal tax forms 1040ez La base ajustada de su madre era $20,000. Federal tax forms 1040ez La cantidad de la donación para propósitos del impuesto sobre donaciones era $36,000 ($50,000 menos la exclusión anual de $14,000). Federal tax forms 1040ez Su madre pagó un impuesto sobre donaciones de $7,320 sobre los bienes. Federal tax forms 1040ez La base de usted es $26,076, calculada de la siguiente manera: Valor justo de mercado. Federal tax forms 1040ez $50,000 Menos: Base ajustada −20,000 Aumento neto en valor $30,000     Impuesto sobre la donación pagado $7,320 Multiplicado por ($30,000 ÷ $36,000) × 0. Federal tax forms 1040ez 83 Impuesto sobre la donación debido al aumento neto en valor $6,076 Base ajustada de los bienes para su madre +20,000 La base de los bienes para usted $26,076 Nota: Si recibió una donación antes de 1977, la base de la donación para usted (la base ajustada del donante) incluye todos los impuestos sobre donaciones pagados sobre ésta. Federal tax forms 1040ez Sin embargo, la base no puede ser mayor que el valor justo de mercado de la donación al momento en que se le dio a usted. Federal tax forms 1040ez Bienes Heredados Su base en bienes heredados de un difunto que falleció antes del 1 de enero de 2010 o después del 31 de diciembre de 2010, es normalmente uno de los siguientes: El valor justo de mercado de los bienes en la fecha de muerte del difunto. Federal tax forms 1040ez El valor justo de mercado en la fecha de valuación alternativa si el representante personal del caudal hereditario elige usar una valuación alternativa. Federal tax forms 1040ez El valor según el método de valuación de uso especial para bienes raíces usados en actividades agrícolas o en el ejercicio de un negocio estrechamente controlado por pocos accionistas si se elige para propósitos del impuesto sobre la herencia. Federal tax forms 1040ez La base ajustada del terreno del difunto hasta el valor excluido de la herencia sujeto a impuestos del difunto como una servidumbre de conservación calificada. Federal tax forms 1040ez Si no hay que presentar una declaración del impuesto federal sobre la herencia, la base de los bienes heredados es el valor tasado en la fecha de fallecimiento para los impuestos estatales sobre la herencia o la transmisión. Federal tax forms 1040ez Para obtener más información, consulte las Instrucciones del Formulario 706, United States Estate (and Generation-Skipping Transfer) Tax Return (Declaración del impuesto sobre el patrimonio (y transferencia con salto de generación) de los Estados Unidos), en inglés. Federal tax forms 1040ez Bienes heredados de un difunto que falleció en 2010. Federal tax forms 1040ez   Si heredó bienes de un difunto que falleció en 2010, pueden aplicarse requisitos especiales. Federal tax forms 1040ez Para más información, vea la Publicación 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010 (Trato tributario de bienes adquiridos de un difunto que falleció en 2010), en inglés. Federal tax forms 1040ez Bienes gananciales. Federal tax forms 1040ez   En las jurisdicciones donde rigen las leyes de la comunidad de bienes gananciales (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington y Wisconsin), se considera generalmente que cada cónyuge posee la mitad de los bienes gananciales. Federal tax forms 1040ez Al fallecer cualquiera de los cónyuges, el total del valor de los bienes gananciales, aún la parte que le pertenece al cónyuge sobreviviente, normalmente se convierte en la base de la totalidad de los bienes. Federal tax forms 1040ez Para que esta regla corresponda, por lo menos la mitad del valor de los bienes gananciales tiene que poderse incluir en el patrimonio bruto del difunto, independientemente de si se tiene que presentar o no una declaración sobre la herencia. Federal tax forms 1040ez Ejemplo. Federal tax forms 1040ez   Usted y su cónyuge tenían bienes gananciales cuya base era $80,000. Federal tax forms 1040ez Cuando su cónyuge falleció, la mitad del valor justo de mercado de los bienes gananciales era incluible en el patrimonio de su cónyuge. Federal tax forms 1040ez El valor justo de mercado de los intereses de los bienes gananciales era $100,000. Federal tax forms 1040ez La base de su mitad de los bienes después de la muerte de su cónyuge es $50,000 (la mitad del valor justo de mercado de $100,000). Federal tax forms 1040ez La base de la otra mitad que se pasa a los herederos de su cónyuge también es $50,000. Federal tax forms 1040ez   Para más información, vea la Publicación 555, Community Property (Comunidad de bienes gananciales), en inglés. Federal tax forms 1040ez Bienes de Uso Personal Cambiados a Uso Comercial o de Alquiler Si tiene bienes para uso personal y luego los cambia a uso comercial o los usa para producir ingresos de alquiler, puede empezar a depreciar dichos bienes al momento del cambio. Federal tax forms 1040ez Para hacerlo, tiene que calcular la base para propósitos de depreciación al momento del cambio. Federal tax forms 1040ez Un ejemplo de un cambio de bienes de uso personal a uso comercial o de alquiler sería alquilar su antigua vivienda personal. Federal tax forms 1040ez Base para propósitos de depreciación. Federal tax forms 1040ez   La base para depreciación es la menor de las siguientes cantidades: El valor justo de mercado de los bienes en la fecha del cambio. Federal tax forms 1040ez La base ajustada en la fecha del cambio. Federal tax forms 1040ez Ejemplo. Federal tax forms 1040ez Hace varios años, usted pagó $160,000 por construir su casa en un terreno que costó $25,000. Federal tax forms 1040ez Pagó $20,000 por mejoras permanentes a la vivienda y declaró una deducción por pérdidas fortuitas de $2,000 por daños a la vivienda antes de cambiar los bienes a uso de alquiler el año pasado. Federal tax forms 1040ez Como el terreno no es depreciable, usted incluye sólo el costo de la vivienda al calcular la base para propósitos de determinar depreciación. Federal tax forms 1040ez Su base ajustada en la vivienda, cuando cambió su uso, era $178,000 ($160,000 + $20,000 − $2,000). Federal tax forms 1040ez En la misma fecha, su propiedad tenía un valor justo de mercado de $180,000, del cual $15,000 correspondían al terreno y $165,000 a la vivienda. Federal tax forms 1040ez La base para calcular la depreciación de la vivienda es el valor justo de mercado en la fecha del cambio ($165,000) ya que es menor que la base ajustada ($178,000). Federal tax forms 1040ez Venta de bienes. Federal tax forms 1040ez   Si en el futuro usted vende o enajena los bienes cambiados a uso comercial o de alquiler, la base que use dependerá de si calcula pérdidas o ganancias. Federal tax forms 1040ez Ganancia. Federal tax forms 1040ez   La base para calcular una ganancia es la base ajustada de los bienes en el momento de la venta. Federal tax forms 1040ez Ejemplo. Federal tax forms 1040ez Suponga los mismos hechos que en el ejemplo anterior, excepto que usted vende los bienes obteniendo una ganancia después de descontar $37,500 por concepto de deducciones por depreciación. Federal tax forms 1040ez Su base ajustada para calcular la ganancia es $165,500 ($178,000 + $25,000 (terreno) − $37,500). Federal tax forms 1040ez Pérdida. Federal tax forms 1040ez   Calcule la base para una pérdida empezando con la base ajustada o el valor justo de mercado de los bienes al momento del cambio a uso comercial o de alquiler, el que sea menor. Federal tax forms 1040ez Luego haga ajustes (aumentos y reducciones) para el período después del cambio de uso de los bienes, como se explicó anteriormente bajo Base Ajustada . Federal tax forms 1040ez Ejemplo. Federal tax forms 1040ez Suponga los mismos hechos que en el ejemplo anterior, excepto que usted vende los bienes con pérdida después de descontar $37,500 por concepto de deducciones por depreciación. Federal tax forms 1040ez En este caso, empezaría con el valor justo de mercado en la fecha del cambio a uso de alquiler ($180,000), ya que es menor que la base ajustada de $203,000 ($178,000 + $25,000 (terreno)) en esa fecha. Federal tax forms 1040ez Reste de esa cantidad ($180,000) las deducciones por depreciación ($37,500). Federal tax forms 1040ez La base para pérdidas es $142,500 ($180,000 − $37,500). Federal tax forms 1040ez Acciones y Bonos La base de acciones o bonos que usted compre, por lo general, es el precio de compra más los costos de la compra, como comisiones y costos de registro o de traspaso. Federal tax forms 1040ez Si obtiene acciones o bonos por un medio que no sea la compra, la base suele determinarse por el valor justo de mercado o la base ajustada del propietario anterior, como se explica anteriormente. Federal tax forms 1040ez Tiene que ajustar la base de las acciones según ciertos hechos que sucedan después de la compra. Federal tax forms 1040ez Por ejemplo, si recibe acciones adicionales de dividendos de acciones no sujetas a impuestos o divisiones de acciones, reduzca la base para cada acción, dividiendo la base ajustada de las acciones antiguas entre el número de acciones antiguas y nuevas. Federal tax forms 1040ez Esta regla se aplica sólo cuando el número de acciones adicionales recibidas es idéntico al número de acciones tenidas. Federal tax forms 1040ez Además, reduzca la base cuando reciba distribuciones no sujetas a impuestos. Federal tax forms 1040ez Son un rendimiento de capital. Federal tax forms 1040ez Ejemplo. Federal tax forms 1040ez En el año 2011, compró 100 acciones de XYZ por $1,000, o sea, a $10 por acción. Federal tax forms 1040ez En el año 2012, compró 100 acciones de XYZ por $1,600, o sea, a $16 por acción. Federal tax forms 1040ez En el año 2013, XYZ declaró una división de acciones de 2 por 1. Federal tax forms 1040ez Ahora tiene 200 acciones con una base de $5 por acción y 200 acciones con una base de $8 por acción. Federal tax forms 1040ez Otras bases. Federal tax forms 1040ez   Existen otras maneras de calcular la base de acciones o bonos, según cómo los adquirió. Federal tax forms 1040ez Para obtener información más detallada, consulte Stocks and Bonds (Acciones y bonos) bajo Basis of Investment Property (Base de bienes de inversión) en el capítulo 4 de la Publicación 550, en inglés. Federal tax forms 1040ez Cómo identificar acciones o bonos vendidos. Federal tax forms 1040ez   Si puede identificar correctamente las acciones o los bonos que vendió, entonces la base de éstos es el costo u otra base de las acciones o bonos específicos. Federal tax forms 1040ez Si compra y vende valores en fechas distintas y en cantidades distintas y no puede identificar correctamente las acciones vendidas, entonces la base de los valores que venda es la base de los valores que adquirió primero. Federal tax forms 1040ez Para obtener más información sobre cómo identificar los valores que venda, consulte Stocks and Bonds (Acciones y bonos) bajo Basis of Investment Property (Base de bienes de inversión) en el capítulo 4 de la Publicación 550, en inglés. Federal tax forms 1040ez Acciones de fondos mutuos. Federal tax forms 1040ez   Si vende acciones de fondos mutuos que adquirió en fechas distintas y a precios distintos, y que dejó en depósito en una cuenta mantenida por un custodio o agente, puede optar por usar una base promedio. Federal tax forms 1040ez Para obtener más información, consulte la Publicación 550, en inglés. Federal tax forms 1040ez Prima de bonos. Federal tax forms 1040ez   Si compra un bono sujeto a impuestos con prima (o sea, a un precio que excede su valor nominal) y elige amortizarla, reste de la base del bono la prima amortizada que deduzca cada año. Federal tax forms 1040ez Para obtener más información, consulte Bond Premium Amortization (Amortización de primas de bonos) en el capítulo 3 de la Publicación 550, en inglés. Federal tax forms 1040ez Aunque no puede deducir la prima sobre un bono exento de impuestos, tiene que amortizar la prima cada año y restar la cantidad amortizada de la base del bono. Federal tax forms 1040ez Descuento de la emisión original (OID) sobre instrumentos de deuda. Federal tax forms 1040ez   Tiene que aumentar la base de un instrumento de deuda de un descuento de la emisión original (OID, por sus siglas en inglés) por el OID que incluya en sus ingresos por ese instrumento. Federal tax forms 1040ez Consulte Descuento de la emisión original (OID) en el capítulo 7 y la Publicación 1212, Guide to Original Issue Discount (OID) Instruments (Guía de instrumentos del descuento de la emisión original (OID)), en inglés. Federal tax forms 1040ez Obligaciones exentas de impuestos. Federal tax forms 1040ez    Por lo general, el OID sobre las obligaciones exentas de impuestos no está sujeto a impuestos. Federal tax forms 1040ez Sin embargo, cuando enajene una obligación exenta de impuestos emitida después del 3 de septiembre de 1982 y comprada después del 1 de marzo de 1984, tiene que acumular el OID sobre la obligación para determinar su base ajustada. Federal tax forms 1040ez El OID acumulado se suma a la base de la obligación para determinar su pérdida o ganancia. Federal tax forms 1040ez Consulte el cápitulo 4 de la Publicación 550, en inglés. Federal tax forms 1040ez Prev  Up  Next   Home   More Online Publications

The Federal Tax Forms 1040ez

Federal tax forms 1040ez Publication 936 - Main Content Table of Contents Part I. Federal tax forms 1040ez Home Mortgage InterestSecured Debt Qualified Home Special Situations Points Mortgage Insurance Premiums Form 1098, Mortgage Interest Statement How To Report Special Rule for Tenant-Stockholders in Cooperative Housing Corporations Part II. Federal tax forms 1040ez Limits on Home Mortgage Interest DeductionHome Acquisition Debt Home Equity Debt Grandfathered Debt Table 1 Instructions How To Get Tax HelpLow Income Taxpayer Clinics Part I. Federal tax forms 1040ez Home Mortgage Interest This part explains what you can deduct as home mortgage interest. Federal tax forms 1040ez It includes discussions on points, mortgage insurance premiums, and how to report deductible interest on your tax return. Federal tax forms 1040ez Generally, home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home). Federal tax forms 1040ez The loan may be a mortgage to buy your home, a second mortgage, a line of credit, or a home equity loan. Federal tax forms 1040ez You can deduct home mortgage interest if all the following conditions are met. Federal tax forms 1040ez You file Form 1040 and itemize deductions on Schedule A (Form 1040). Federal tax forms 1040ez The mortgage is a secured debt on a qualified home in which you have an ownership interest. Federal tax forms 1040ez Secured Debt and Qualified Home are explained later. Federal tax forms 1040ez  Both you and the lender must intend that the loan be repaid. Federal tax forms 1040ez Fully deductible interest. Federal tax forms 1040ez   In most cases, you can deduct all of your home mortgage interest. Federal tax forms 1040ez How much you can deduct depends on the date of the mortgage, the amount of the mortgage, and how you use the mortgage proceeds. Federal tax forms 1040ez   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. Federal tax forms 1040ez (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 category. Federal tax forms 1040ez ) If one or more of your mortgages does not fit into any of these categories, use Part II of this publication to figure the amount of interest you can deduct. Federal tax forms 1040ez   The three categories are as follows. Federal tax forms 1040ez Mortgages you took out on or before October 13, 1987 (called grandfathered debt). Federal tax forms 1040ez Mortgages you took out after October 13, 1987, to buy, build, or improve your home (called home acquisition debt), but only if throughout 2013 these mortgages plus any grandfathered debt totaled $1 million or less ($500,000 or less if married filing separately). Federal tax forms 1040ez Mortgages you took out after October 13, 1987, other than to buy, build, or improve your home (called home equity debt), but only if throughout 2013 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). Federal tax forms 1040ez The dollar limits for the second and third categories apply to the combined mortgages on your main home and second home. Federal tax forms 1040ez   See Part II for more detailed definitions of grandfathered, home acquisition, and home equity debt. Federal tax forms 1040ez    You can use Figure A to check whether your home mortgage interest is fully deductible. Federal tax forms 1040ez This image is too large to be displayed in the current screen. Federal tax forms 1040ez Please click the link to view the image. Federal tax forms 1040ez Figure A. Federal tax forms 1040ez Is My Home Mortgage Interest Fully Deductible? Secured Debt You can deduct your home mortgage interest only if your mortgage is a secured debt. Federal tax forms 1040ez 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 Is recorded or is otherwise perfected under any state or local law that applies. Federal tax forms 1040ez In other words, your mortgage is a secured debt if you put your home up as collateral to protect the interests of the lender. Federal tax forms 1040ez If you cannot pay the debt, your home can then serve as payment to the lender to satisfy (pay) the debt. Federal tax forms 1040ez In this publication, mortgage will refer to secured debt. Federal tax forms 1040ez Debt not secured by home. Federal tax forms 1040ez   A debt is not secured by your home if it is secured solely because 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). Federal tax forms 1040ez   A debt is not secured by your home if it once was, but is no longer secured by your home. Federal tax forms 1040ez Wraparound mortgage. Federal tax forms 1040ez   This is not a secured debt unless it is recorded or otherwise perfected under state law. Federal tax forms 1040ez Example. Federal tax forms 1040ez Beth owns a home subject to a mortgage of $40,000. Federal tax forms 1040ez She sells the home for $100,000 to John, who takes it subject to the $40,000 mortgage. Federal tax forms 1040ez Beth continues to make the payments on the $40,000 note. Federal tax forms 1040ez John pays $10,000 down and gives Beth a $90,000 note secured by a wraparound mortgage on the home. Federal tax forms 1040ez Beth does not record or otherwise perfect the $90,000 mortgage under the state law that applies. Federal tax forms 1040ez Therefore, the mortgage is not a secured debt and John cannot deduct any of the interest he pays on it as home mortgage interest. Federal tax forms 1040ez Choice to treat the debt as not secured by your home. Federal tax forms 1040ez   You can choose to treat any debt secured by your qualified home as not secured by the home. Federal tax forms 1040ez This treatment begins with the tax year for which you make the choice and continues for all later tax years. Federal tax forms 1040ez You can revoke your choice only with the consent of the Internal Revenue Service (IRS). Federal tax forms 1040ez   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. Federal tax forms 1040ez 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. Federal tax forms 1040ez Cooperative apartment owner. Federal tax forms 1040ez   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. Federal tax forms 1040ez Qualified Home For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. Federal tax forms 1040ez This means your main home or your second home. Federal tax forms 1040ez A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities. Federal tax forms 1040ez 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. Federal tax forms 1040ez Otherwise, it is considered personal interest and is not deductible. Federal tax forms 1040ez Main home. Federal tax forms 1040ez   You can have only one main home at any one time. Federal tax forms 1040ez This is the home where you ordinarily live most of the time. Federal tax forms 1040ez Second home. Federal tax forms 1040ez   A second home is a home that you choose to treat as your second home. Federal tax forms 1040ez Second home not rented out. Federal tax forms 1040ez   If you have a second home that you do not hold out for rent or resale to others at any time during the year, you can treat it as a qualified home. Federal tax forms 1040ez You do not have to use the home during the year. Federal tax forms 1040ez Second home rented out. Federal tax forms 1040ez   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. Federal tax forms 1040ez 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. Federal tax forms 1040ez If you do not use the home long enough, it is considered rental property and not a second home. Federal tax forms 1040ez For information on residential rental property, see Publication 527. Federal tax forms 1040ez More than one second home. Federal tax forms 1040ez   If you have more than one second home, you can treat only one as the qualified second home during any year. Federal tax forms 1040ez However, you can change the home you treat as a second home during the year in the following situations. Federal tax forms 1040ez 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. Federal tax forms 1040ez 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. Federal tax forms 1040ez 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. Federal tax forms 1040ez Divided use of your home. Federal tax forms 1040ez   The only part of your home that is considered a qualified home is the part you use for residential living. Federal tax forms 1040ez 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. Federal tax forms 1040ez 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 is not. Federal tax forms 1040ez 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. Federal tax forms 1040ez (See Home Acquisition Debt in Part II. Federal tax forms 1040ez ) Dividing the fair market value may affect your home equity debt limit, also explained in Part II . Federal tax forms 1040ez Renting out part of home. Federal tax forms 1040ez   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. Federal tax forms 1040ez The rented part of your home is used by the tenant primarily for residential living. Federal tax forms 1040ez The rented part of your home is not a self-contained residential unit having separate sleeping, cooking, and toilet facilities. Federal tax forms 1040ez You do not 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. Federal tax forms 1040ez If two persons (and dependents of either) share the same sleeping quarters, they are treated as one tenant. Federal tax forms 1040ez Office in home. Federal tax forms 1040ez   If you have an office in your home that you use in your business, see Publication 587, Business Use of Your Home. Federal tax forms 1040ez It explains how to figure your deduction for the business use of your home, which includes the business part of your home mortgage interest. Federal tax forms 1040ez Home under construction. Federal tax forms 1040ez   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. Federal tax forms 1040ez   The 24-month period can start any time on or after the day construction begins. Federal tax forms 1040ez Home destroyed. Federal tax forms 1040ez   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. Federal tax forms 1040ez This means you can continue to deduct the interest you pay on your home mortgage, subject to the limits described in this publication. Federal tax forms 1040ez   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. Federal tax forms 1040ez   This rule applies to your main home and to a second home that you treat as a qualified home. Federal tax forms 1040ez Time-sharing arrangements. Federal tax forms 1040ez   You can treat a home you own under a time-sharing plan as a qualified home if it meets all the requirements. Federal tax forms 1040ez 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. Federal tax forms 1040ez Rental of time-share. Federal tax forms 1040ez   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. Federal tax forms 1040ez See Second home rented out , earlier, for the use requirement. Federal tax forms 1040ez 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. Federal tax forms 1040ez Married taxpayers. Federal tax forms 1040ez   If you are married and file a joint return, your qualified home(s) can be owned either jointly or by only one spouse. Federal tax forms 1040ez Separate returns. Federal tax forms 1040ez   If you are 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. Federal tax forms 1040ez However, if you both consent in writing, then one spouse can take both the main home and a second home into account. Federal tax forms 1040ez Special Situations This section describes certain items that can be included as home mortgage interest and others that cannot. Federal tax forms 1040ez It also describes certain special situations that may affect your deduction. Federal tax forms 1040ez Late payment charge on mortgage payment. Federal tax forms 1040ez   You can deduct as home mortgage interest a late payment charge if it was not for a specific service performed in connection with your mortgage loan. Federal tax forms 1040ez Mortgage prepayment penalty. Federal tax forms 1040ez   If you pay off your home mortgage early, you may have to pay a penalty. Federal tax forms 1040ez You can deduct that penalty as home mortgage interest provided the penalty is not for a specific service performed or cost incurred in connection with your mortgage loan. Federal tax forms 1040ez Sale of home. Federal tax forms 1040ez   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. Federal tax forms 1040ez Example. Federal tax forms 1040ez John and Peggy Harris sold their home on May 7. Federal tax forms 1040ez Through April 30, they made home mortgage interest payments of $1,220. Federal tax forms 1040ez 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. Federal tax forms 1040ez Their mortgage interest deduction is $1,270 ($1,220 + $50). Federal tax forms 1040ez Prepaid interest. Federal tax forms 1040ez   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. Federal tax forms 1040ez You can deduct in each year only the interest that qualifies as home mortgage interest for that year. Federal tax forms 1040ez However, there is an exception that applies to points, discussed later. Federal tax forms 1040ez Mortgage interest credit. Federal tax forms 1040ez    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. Federal tax forms 1040ez Figure the credit on Form 8396, Mortgage Interest Credit. Federal tax forms 1040ez If you take this credit, you must reduce your mortgage interest deduction by the amount of the credit. Federal tax forms 1040ez   See Form 8396 and Publication 530 for more information on the mortgage interest credit. Federal tax forms 1040ez Ministers' and military housing allowance. Federal tax forms 1040ez   If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you can still deduct your home mortgage interest. Federal tax forms 1040ez Hardest Hit Fund and Emergency Homeowners' Loan Programs. Federal tax forms 1040ez   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. Federal tax forms 1040ez You received assistance under: A State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest, or An Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state. Federal tax forms 1040ez 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. Federal tax forms 1040ez If you meet these tests, 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)), box 4 (mortgage insurance premiums), and box 5 (other information including real property taxes paid). Federal tax forms 1040ez However, you are not required to use this special method to compute your deduction for mortgage interest and real estate taxes on your main home. Federal tax forms 1040ez Mortgage assistance payments under section 235 of the National Housing Act. Federal tax forms 1040ez   If you qualify for mortgage assistance payments for lower-income families under section 235 of the National Housing Act, part or all of the interest on your mortgage may be paid for you. Federal tax forms 1040ez You cannot deduct the interest that is paid for you. Federal tax forms 1040ez No other effect on taxes. Federal tax forms 1040ez   Do not include these mortgage assistance payments in your income. Federal tax forms 1040ez Also, do not use these payments to reduce other deductions, such as real estate taxes. Federal tax forms 1040ez Divorced or separated individuals. Federal tax forms 1040ez   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. Federal tax forms 1040ez See the discussion of Payments for jointly-owned home under Alimony in Publication 504, Divorced or Separated Individuals. Federal tax forms 1040ez Redeemable ground rents. Federal tax forms 1040ez   In some states (such as Maryland), you can buy your home subject to a ground rent. Federal tax forms 1040ez A ground rent is an obligation you assume to pay a fixed amount per year on the property. Federal tax forms 1040ez Under this arrangement, you are leasing (rather than buying) the land on which your home is located. Federal tax forms 1040ez   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct them as mortgage interest. Federal tax forms 1040ez   A ground rent is a redeemable ground rent if all of the following are true. Federal tax forms 1040ez Your lease, including renewal periods, is for more than 15 years. Federal tax forms 1040ez You can freely assign the lease. Federal tax forms 1040ez 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. Federal tax forms 1040ez The lessor's interest in the land is primarily a security interest to protect the rental payments to which he or she is entitled. Federal tax forms 1040ez   Payments made to end the lease and to buy the lessor's entire interest in the land are not deductible as mortgage interest. Federal tax forms 1040ez Nonredeemable ground rents. Federal tax forms 1040ez   Payments on a nonredeemable ground rent are not mortgage interest. Federal tax forms 1040ez You can deduct them as rent if they are a business expense or if they are for rental property. Federal tax forms 1040ez Reverse mortgages. Federal tax forms 1040ez   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. Federal tax forms 1040ez With a reverse mortgage, you retain title to your home. Federal tax forms 1040ez 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. Federal tax forms 1040ez Because reverse mortgages are considered loan advances and not income, the amount you receive is not taxable. Federal tax forms 1040ez Any interest (including original issue discount) accrued on a reverse mortgage is not deductible until you actually pay it, which is usually when you pay off the loan in full. Federal tax forms 1040ez Your deduction may be limited because a reverse mortgage loan generally is subject to the limit on Home Equity Debt discussed in Part II. Federal tax forms 1040ez Rental payments. Federal tax forms 1040ez   If you live in a house before final settlement on the purchase, any payments you make for that period are rent and not interest. Federal tax forms 1040ez This is true even if the settlement papers call them interest. Federal tax forms 1040ez You cannot deduct these payments as home mortgage interest. Federal tax forms 1040ez Mortgage proceeds invested in tax-exempt securities. Federal tax forms 1040ez   You cannot 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. Federal tax forms 1040ez “Grandfathered debt” and “home equity debt” are defined in Part II of this publication. Federal tax forms 1040ez Refunds of interest. Federal tax forms 1040ez   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. Federal tax forms 1040ez 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. Federal tax forms 1040ez However, you need to include it only up to the amount of the deduction that reduced your tax in the earlier year. Federal tax forms 1040ez This is true whether the interest overcharge was refunded to you or was used to reduce the outstanding principal on your mortgage. Federal tax forms 1040ez If you need to include the refund in income, report it on Form 1040, line 21. Federal tax forms 1040ez   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 3. Federal tax forms 1040ez For information about Form 1098, see Form 1098, Mortgage Interest Statement , later. Federal tax forms 1040ez   For more information on how to treat refunds of interest deducted in earlier years, see Recoveries in Publication 525, Taxable and Nontaxable Income. Federal tax forms 1040ez Cooperative apartment owner. Federal tax forms 1040ez   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. Federal tax forms 1040ez The patronage dividend is a partial refund to the cooperative housing corporation of mortgage interest it paid in a prior year. Federal tax forms 1040ez   If you receive a Form 1098 from the cooperative housing corporation, the form should show only the amount you can deduct. Federal tax forms 1040ez Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Federal tax forms 1040ez Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points. Federal tax forms 1040ez This image is too large to be displayed in the current screen. Federal tax forms 1040ez Please click the link to view the image. Federal tax forms 1040ez Figure B. Federal tax forms 1040ez Are My Points Fully Deductible This Year? A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. Federal tax forms 1040ez See Points paid by the seller , later. Federal tax forms 1040ez General Rule You generally cannot deduct the full amount of points in the year paid. Federal tax forms 1040ez Because they are prepaid interest, you generally deduct them ratably over the life (term) of the mortgage. Federal tax forms 1040ez See Deduction Allowed Ratably , next. Federal tax forms 1040ez For exceptions to the general rule, see Deduction Allowed in Year Paid , later. Federal tax forms 1040ez Deduction Allowed Ratably If you do not meet the tests listed under Deduction Allowed in Year Paid , later, the loan is not 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. Federal tax forms 1040ez You use the cash method of accounting. Federal tax forms 1040ez This means you report income in the year you receive it and deduct expenses in the year you pay them. Federal tax forms 1040ez Most individuals use this method. Federal tax forms 1040ez Your loan is secured by a home. Federal tax forms 1040ez (The home does not need to be your main home. Federal tax forms 1040ez ) Your loan period is not more than 30 years. Federal tax forms 1040ez 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. Federal tax forms 1040ez Either your loan amount is $250,000 or less, or the number of points is not more than: 4, if your loan period is 15 years or less, or 6, if your loan period is more than 15 years. Federal tax forms 1040ez Example. Federal tax forms 1040ez You use the cash method of accounting. Federal tax forms 1040ez In 2013, you took out a $100,000 loan payable over 20 years. Federal tax forms 1040ez The terms of the loan are the same as for other 20-year loans offered in your area. Federal tax forms 1040ez You paid $4,800 in points. Federal tax forms 1040ez You made 3 monthly payments on the loan in 2013. Federal tax forms 1040ez You can deduct $60 [($4,800 ÷ 240 months) x 3 payments] in 2013. Federal tax forms 1040ez In 2014, if you make all twelve payments, you will be able to deduct $240 ($20 x 12). Federal tax forms 1040ez Deduction Allowed in Year Paid You can fully deduct points in the year paid if you meet all the following tests. Federal tax forms 1040ez (You can use Figure B as a quick guide to see whether your points are fully deductible in the year paid. Federal tax forms 1040ez ) Your loan is secured by your main home. Federal tax forms 1040ez (Your main home is the one you ordinarily live in most of the time. Federal tax forms 1040ez ) Paying points is an established business practice in the area where the loan was made. Federal tax forms 1040ez The points paid were not more than the points generally charged in that area. Federal tax forms 1040ez You use the cash method of accounting. Federal tax forms 1040ez This means you report income in the year you receive it and deduct expenses in the year you pay them. Federal tax forms 1040ez Most individuals use this method. Federal tax forms 1040ez The points were not 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. Federal tax forms 1040ez The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. Federal tax forms 1040ez The funds you provided are not required to have been applied to the points. Federal tax forms 1040ez They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. Federal tax forms 1040ez You cannot have borrowed these funds from your lender or mortgage broker. Federal tax forms 1040ez You use your loan to buy or build your main home. Federal tax forms 1040ez The points were computed as a percentage of the principal amount of the mortgage. Federal tax forms 1040ez The amount is clearly shown on the settlement statement (such as the Settlement Statement, Form HUD-1) as points charged for the mortgage. Federal tax forms 1040ez The points may be shown as paid from either your funds or the seller's. Federal tax forms 1040ez Note. Federal tax forms 1040ez 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. Federal tax forms 1040ez Home improvement loan. Federal tax forms 1040ez   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. Federal tax forms 1040ez Second home. Federal tax forms 1040ez You cannot fully deduct in the year paid points you pay on loans secured by your second home. Federal tax forms 1040ez You can deduct these points only over the life of the loan. Federal tax forms 1040ez Refinancing. Federal tax forms 1040ez   Generally, points you pay to refinance a mortgage are not deductible in full in the year you pay them. Federal tax forms 1040ez This is true even if the new mortgage is secured by your main home. Federal tax forms 1040ez   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. Federal tax forms 1040ez You can deduct the rest of the points over the life of the loan. Federal tax forms 1040ez Example 1. Federal tax forms 1040ez In 1998, Bill Fields got a mortgage to buy a home. Federal tax forms 1040ez In 2013, Bill refinanced that mortgage with a 15-year $100,000 mortgage loan. Federal tax forms 1040ez The mortgage is secured by his home. Federal tax forms 1040ez To get the new loan, he had to pay three points ($3,000). Federal tax forms 1040ez 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. Federal tax forms 1040ez Bill paid the points out of his private funds, rather than out of the proceeds of the new loan. Federal tax forms 1040ez The payment of points is an established practice in the area, and the points charged are not more than the amount generally charged there. Federal tax forms 1040ez Bill's first payment on the new loan was due July 1. Federal tax forms 1040ez He made six payments on the loan in 2013 and is a cash basis taxpayer. Federal tax forms 1040ez Bill used the funds from the new mortgage to repay his existing mortgage. Federal tax forms 1040ez Although the new mortgage loan was for Bill's continued ownership of his main home, it was not for the purchase or improvement of that home. Federal tax forms 1040ez He cannot deduct all of the points in 2013. Federal tax forms 1040ez He can deduct two points ($2,000) ratably over the life of the loan. Federal tax forms 1040ez He deducts $67 [($2,000 ÷ 180 months) × 6 payments] of the points in 2013. Federal tax forms 1040ez The other point ($1,000) was a fee for services and is not deductible. Federal tax forms 1040ez Example 2. Federal tax forms 1040ez 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. Federal tax forms 1040ez Bill deducts 25% ($25,000 ÷ $100,000) of the points ($2,000) in 2013. Federal tax forms 1040ez His deduction is $500 ($2,000 × 25%). Federal tax forms 1040ez Bill also deducts the ratable part of the remaining $1,500 ($2,000 − $500) that must be spread over the life of the loan. Federal tax forms 1040ez This is $50 [($1,500 ÷ 180 months) × 6 payments] in 2013. Federal tax forms 1040ez The total amount Bill deducts in 2013 is $550 ($500 + $50). Federal tax forms 1040ez Special Situations This section describes certain special situations that may affect your deduction of points. Federal tax forms 1040ez Original issue discount. Federal tax forms 1040ez   If you do not 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. Federal tax forms 1040ez This reduction results in original issue discount, which is discussed in chapter 4 of Publication 535. Federal tax forms 1040ez Amounts charged for services. Federal tax forms 1040ez    Amounts charged by the lender for specific services connected to the loan are not interest. Federal tax forms 1040ez Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. Federal tax forms 1040ez  You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. Federal tax forms 1040ez Points paid by the seller. Federal tax forms 1040ez   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. Federal tax forms 1040ez Treatment by seller. Federal tax forms 1040ez   The seller cannot deduct these fees as interest. Federal tax forms 1040ez But they are a selling expense that reduces the amount realized by the seller. Federal tax forms 1040ez See Publication 523 for information on selling your home. Federal tax forms 1040ez Treatment by buyer. Federal tax forms 1040ez   The buyer reduces the basis of the home by the amount of the seller-paid points and treats the points as if he or she had paid them. Federal tax forms 1040ez If all the tests under Deduction Allowed in Year Paid , earlier, are met, the buyer can deduct the points in the year paid. Federal tax forms 1040ez If any of those tests are not met, the buyer deducts the points over the life of the loan. Federal tax forms 1040ez   If you need information about the basis of your home, see Publication 523 or Publication 530. Federal tax forms 1040ez Funds provided are less than points. Federal tax forms 1040ez   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. Federal tax forms 1040ez In addition, you can deduct any points paid by the seller. Federal tax forms 1040ez Example 1. Federal tax forms 1040ez When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). Federal tax forms 1040ez You meet all the tests for deducting points in the year paid, except the only funds you provided were a $750 down payment. Federal tax forms 1040ez Of the $1,000 charged for points, you can deduct $750 in the year paid. Federal tax forms 1040ez You spread the remaining $250 over the life of the mortgage. Federal tax forms 1040ez Example 2. Federal tax forms 1040ez 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. Federal tax forms 1040ez In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). Federal tax forms 1040ez You spread the remaining $250 over the life of the mortgage. Federal tax forms 1040ez You must reduce the basis of your home by the $1,000 paid by the seller. Federal tax forms 1040ez Excess points. Federal tax forms 1040ez   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. Federal tax forms 1040ez You must spread any additional points over the life of the mortgage. Federal tax forms 1040ez Mortgage ending early. Federal tax forms 1040ez   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. Federal tax forms 1040ez However, if you refinance the mortgage with the same lender, you cannot deduct any remaining balance of spread points. Federal tax forms 1040ez Instead, deduct the remaining balance over the term of the new loan. Federal tax forms 1040ez   A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. Federal tax forms 1040ez Example. Federal tax forms 1040ez Dan paid $3,000 in points in 2002 that he had to spread out over the 15-year life of the mortgage. Federal tax forms 1040ez He deducts $200 points per year. Federal tax forms 1040ez Through 2012, Dan has deducted $2,200 of the points. Federal tax forms 1040ez Dan prepaid his mortgage in full in 2013. Federal tax forms 1040ez He can deduct the remaining $800 of points in 2013. Federal tax forms 1040ez Limits on deduction. Federal tax forms 1040ez   You cannot fully deduct points paid on a mortgage that exceeds the limits discussed in Part II . Federal tax forms 1040ez See the Table 1 Instructions for line 10. Federal tax forms 1040ez Form 1098. Federal tax forms 1040ez    The mortgage interest statement you receive should show not only the total interest paid during the year, but also your deductible points paid during the year. Federal tax forms 1040ez See Form 1098, Mortgage Interest Statement , later. Federal tax forms 1040ez Mortgage Insurance Premiums You can treat amounts you paid during 2013 for qualified mortgage insurance as home mortgage interest. Federal tax forms 1040ez The insurance must be in connection with home acquisition debt, and the insurance contract must have been issued after 2006. Federal tax forms 1040ez Qualified mortgage insurance. Federal tax forms 1040ez   Qualified mortgage insurance is mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, or the Rural Housing Service, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006). Federal tax forms 1040ez   Mortgage insurance provided by the Department of Veterans Affairs is commonly known as a funding fee. Federal tax forms 1040ez If provided by the Rural Housing Service, it is commonly known as a guarantee fee. Federal tax forms 1040ez The funding fee and guarantee fee can either be included in the amount of the loan or paid in full at the time of closing. Federal tax forms 1040ez These fees can be deducted fully in 2013 if the mortgage insurance contract was issued in 2013. Federal tax forms 1040ez Contact the mortgage insurance issuer to determine the deductible amount if it is not reported in box 4 of Form 1098. Federal tax forms 1040ez Special rules for prepaid mortgage insurance. Federal tax forms 1040ez   Generally, if you paid premiums for qualified mortgage insurance that are properly allocable to periods after the close of the tax year, such premiums are treated as paid in the period to which they are allocated. Federal tax forms 1040ez You must allocate the premiums over the shorter of the stated term of the mortgage or 84 months, beginning with the month the insurance was obtained. Federal tax forms 1040ez No deduction is allowed for the unamortized balance if the mortgage is satisfied before its term. Federal tax forms 1040ez This paragraph does not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or the Rural Housing Service. Federal tax forms 1040ez Example. Federal tax forms 1040ez Ryan purchased a home in May of 2012 and financed the home with a 15-year mortgage. Federal tax forms 1040ez Ryan also prepaid all of the $9,240 in private mortgage insurance required at the time of closing in May. Federal tax forms 1040ez Since the $9,240 in private mortgage insurance is allocable to periods after 2012, Ryan must allocate the $9,240 over the shorter of the life of the mortgage or 84 months. Federal tax forms 1040ez Ryan's adjusted gross income (AGI) for 2012 is $76,000. Federal tax forms 1040ez Ryan can deduct $880 ($9,240 ÷ 84 x 8 months) for qualified mortgage insurance premiums in 2012. Federal tax forms 1040ez For 2013, Ryan can deduct $1,320 ($9,240 ÷ 84 x 12 months) if his AGI is $100,000 or less. Federal tax forms 1040ez In this example, the mortgage insurance premiums are allocated over 84 months, which is shorter than the life of the mortgage of 15 years (180 months). Federal tax forms 1040ez Limit on deduction. Federal tax forms 1040ez   If your adjusted gross income on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are otherwise deductible is reduced and may be eliminated. Federal tax forms 1040ez See Line 13 in the instructions for Schedule A (Form 1040) and complete the Mortgage Insurance Premiums Deduction Worksheet to figure the amount you can deduct. Federal tax forms 1040ez If your adjusted gross income is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. Federal tax forms 1040ez Form 1098. Federal tax forms 1040ez   The mortgage interest statement you receive should show not only the total interest paid during the year, but also your mortgage insurance premiums paid during the year, which may qualify to be treated as deductible mortgage interest. Federal tax forms 1040ez See Form 1098, Mortgage Interest Statement, next. Federal tax forms 1040ez Form 1098, Mortgage Interest Statement If you paid $600 or more of mortgage interest (including certain points and mortgage insurance premiums) during the year on any one mortgage, you generally will receive a Form 1098 or a similar statement from the mortgage holder. Federal tax forms 1040ez 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. Federal tax forms 1040ez A governmental unit is a person for purposes of furnishing the statement. Federal tax forms 1040ez The statement for each year should be sent to you by January 31 of the following year. Federal tax forms 1040ez A copy of this form will also be sent to the IRS. Federal tax forms 1040ez The statement will show the total interest you paid during the year, any mortgage insurance premiums you paid, 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. Federal tax forms 1040ez However, it should not show any interest that was paid for you by a government agency. Federal tax forms 1040ez As a general rule, Form 1098 will include only points that you can fully deduct in the year paid. Federal tax forms 1040ez However, certain points not included on Form 1098 also may be deductible, either in the year paid or over the life of the loan. Federal tax forms 1040ez See the earlier discussion of Points to determine whether you can deduct points not shown on Form 1098. Federal tax forms 1040ez Prepaid interest on Form 1098. Federal tax forms 1040ez   If you prepaid interest in 2013 that accrued in full by January 15, 2014, this prepaid interest may be included in box 1 of Form 1098. Federal tax forms 1040ez However, you cannot deduct the prepaid amount for January 2014 in 2013. Federal tax forms 1040ez (See Prepaid interest , earlier. Federal tax forms 1040ez ) You will have to figure the interest that accrued for 2014 and subtract it from the amount in box 1. Federal tax forms 1040ez You will include the interest for January 2014 with other interest you pay for 2014. Federal tax forms 1040ez Refunded interest. Federal tax forms 1040ez   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 3. Federal tax forms 1040ez See Refunds of interest , earlier. Federal tax forms 1040ez Mortgage insurance premiums. Federal tax forms 1040ez   The amount of mortgage insurance premiums you paid during 2013 may be shown in Box 4 of Form 1098. Federal tax forms 1040ez See Mortgage Insurance Premiums , earlier. Federal tax forms 1040ez How To Report Deduct the home mortgage interest and points reported to you on Form 1098 on Schedule A (Form 1040), line 10. Federal tax forms 1040ez 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. Federal tax forms 1040ez Attach a statement explaining the difference and print “See attached” next to line 10. Federal tax forms 1040ez Deduct home mortgage interest that was not reported to you on Form 1098 on Schedule A (Form 1040), line 11. Federal tax forms 1040ez 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. Federal tax forms 1040ez The seller must give you this number and you must give the seller your TIN. Federal tax forms 1040ez A Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Federal tax forms 1040ez Failure to meet any of these requirements may result in a $50 penalty for each failure. Federal tax forms 1040ez 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. Federal tax forms 1040ez If you can take a deduction for points that were not reported to you on Form 1098, deduct those points on Schedule A (Form 1040), line 12. Federal tax forms 1040ez Deduct mortgage insurance premiums on Schedule A (Form 1040), line 13. Federal tax forms 1040ez More than one borrower. Federal tax forms 1040ez   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. Federal tax forms 1040ez Show how much of the interest each of you paid, and give the name and address of the person who received the form. Federal tax forms 1040ez Deduct your share of the interest on Schedule A (Form 1040), line 11, and print “See attached” next to the line. Federal tax forms 1040ez Also, deduct your share of any qualified mortgage insurance premiums on Schedule A (Form 1040), line 13. Federal tax forms 1040ez   Similarly, if you are 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. Federal tax forms 1040ez Let each of the other borrowers know what his or her share is. Federal tax forms 1040ez Mortgage proceeds used for business or investment. Federal tax forms 1040ez   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. Federal tax forms 1040ez It shows where to deduct the part of your excess interest that is for those activities. Federal tax forms 1040ez 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. Federal tax forms 1040ez Special Rule for Tenant-Stockholders in Cooperative Housing Corporations A qualified home includes stock in a cooperative housing corporation owned by a tenant-stockholder. Federal tax forms 1040ez This applies only if the tenant-stockholder is entitled to live in the house or apartment because of owning stock in the cooperative. Federal tax forms 1040ez Cooperative housing corporation. Federal tax forms 1040ez   This is a corporation that meets all of the following conditions. Federal tax forms 1040ez Has only one class of stock outstanding, 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, Has no stockholders who can receive any distribution out of capital other than on a liquidation of the corporation, and Meets at least one of the following requirements. Federal tax forms 1040ez Receives at least 80% of its gross income for the year in which the mortgage interest is paid or incurred from tenant-stockholders. Federal tax forms 1040ez For this purpose, gross income is all income received during the entire year, including amounts received before the corporation changed to cooperative ownership. Federal tax forms 1040ez 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. Federal tax forms 1040ez 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. Federal tax forms 1040ez Stock used to secure debt. Federal tax forms 1040ez   In some cases, you cannot 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 tenant- stockholder to treat unsecured debt as secured debt). Federal tax forms 1040ez 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. Federal tax forms 1040ez See chapter 4 of Publication 535 for details on these rules. Federal tax forms 1040ez Figuring deductible home mortgage interest. Federal tax forms 1040ez   Generally, if you are a tenant-stockholder, you can deduct payments you make for your share of the interest paid or incurred by the cooperative. Federal tax forms 1040ez 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. Federal tax forms 1040ez   Figure your share of this interest by multiplying the total by the following fraction. Federal tax forms 1040ez      Your shares of stock in the cooperative   The total shares of stock in the cooperative Limits on deduction. Federal tax forms 1040ez   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. Federal tax forms 1040ez The cooperative should determine your share of its grandfathered debt, its home acquisition debt, and its home equity debt. Federal tax forms 1040ez (Your share of each of these types of debt is equal to the average balance of each debt multiplied by the fraction just given. Federal tax forms 1040ez ) 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. Federal tax forms 1040ez Form 1098. Federal tax forms 1040ez    The cooperative should give you a Form 1098 showing your share of the interest. Federal tax forms 1040ez Use the rules in this publication to determine your deductible mortgage interest. Federal tax forms 1040ez Part II. Federal tax forms 1040ez Limits on Home Mortgage Interest Deduction This part of the publication discusses the limits on deductible home mortgage interest. Federal tax forms 1040ez These limits apply to your home mortgage interest expense if you have a home mortgage that does not fit into any of the three categories listed at the beginning of Part I under Fully deductible interest . Federal tax forms 1040ez Your home mortgage interest deduction is limited to the interest on the part of your home mortgage debt that is not more than your qualified loan limit. Federal tax forms 1040ez This is the part of your home mortgage debt that is grandfathered debt or that is not more than the limits for home acquisition debt and home equity debt. Federal tax forms 1040ez Table 1 can help you figure your qualified loan limit and your deductible home mortgage interest. Federal tax forms 1040ez 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). Federal tax forms 1040ez It also must be secured by that home. Federal tax forms 1040ez 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 is not more than the cost of the home plus improvements qualifies as home acquisition debt. Federal tax forms 1040ez The additional debt may qualify as home equity debt (discussed later). Federal tax forms 1040ez Home acquisition debt limit. Federal tax forms 1040ez   The total amount you can treat as home acquisition debt at any time on your main home and second home cannot be more than $1 million ($500,000 if married filing separately). Federal tax forms 1040ez This limit is reduced (but not below zero) by the amount of your grandfathered debt (discussed later). Federal tax forms 1040ez Debt over this limit may qualify as home equity debt (also discussed later). Federal tax forms 1040ez Refinanced home acquisition debt. Federal tax forms 1040ez   Any secured debt you use to refinance home acquisition debt is treated as home acquisition debt. Federal tax forms 1040ez 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. Federal tax forms 1040ez Any additional debt not used to buy, build, or substantially improve a qualified home is not home acquisition debt, but may qualify as home equity debt (discussed later). Federal tax forms 1040ez Mortgage that qualifies later. Federal tax forms 1040ez   A mortgage that does not qualify as home acquisition debt because it does not meet all the requirements may qualify at a later time. Federal tax forms 1040ez For example, a debt that you use to buy your home may not qualify as home acquisition debt because it is not secured by the home. Federal tax forms 1040ez However, if the debt is later secured by the home, it may qualify as home acquisition debt after that time. Federal tax forms 1040ez Similarly, a debt that you use to buy property may not qualify because the property is not a qualified home. Federal tax forms 1040ez However, if the property later becomes a qualified home, the debt may qualify after that time. Federal tax forms 1040ez Mortgage treated as used to buy, build, or improve home. Federal tax forms 1040ez   A mortgage secured by a qualified home may be treated as home acquisition debt, even if you do not actually use the proceeds to buy, build, or substantially improve the home. Federal tax forms 1040ez This applies in the following situations. Federal tax forms 1040ez You buy your home within 90 days before or after the date you take out the mortgage. Federal tax forms 1040ez 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). Federal tax forms 1040ez (See Example 1 later. Federal tax forms 1040ez ) You build or improve your home and take out the mortgage before the work is completed. Federal tax forms 1040ez The home acquisition debt is limited to the amount of the expenses incurred within 24 months before the date of the mortgage. Federal tax forms 1040ez You build or improve your home and take out the mortgage within 90 days after the work is completed. Federal tax forms 1040ez 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. Federal tax forms 1040ez (See Example 2 later. Federal tax forms 1040ez ) Example 1. Federal tax forms 1040ez You bought your main home on June 3 for $175,000. Federal tax forms 1040ez You paid for the home with cash you got from the sale of your old home. Federal tax forms 1040ez On July 15, you took out a mortgage of $150,000 secured by your main home. Federal tax forms 1040ez You used the $150,000 to invest in stocks. Federal tax forms 1040ez 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. Federal tax forms 1040ez The entire mortgage qualifies as home acquisition debt because it was not more than the home's cost. Federal tax forms 1040ez Example 2. Federal tax forms 1040ez On January 31, John began building a home on the lot that he owned. Federal tax forms 1040ez He used $45,000 of his personal funds to build the home. Federal tax forms 1040ez The home was completed on October 31. Federal tax forms 1040ez On November 21, John took out a $36,000 mortgage that was secured by the home. Federal tax forms 1040ez The mortgage can be treated as used to build the home because it was taken out within 90 days after the home was completed. Federal tax forms 1040ez The entire mortgage qualifies as home acquisition debt because it was not more than the expenses incurred within the period beginning 24 months before the home was completed. Federal tax forms 1040ez This is illustrated by Figure C. Federal tax forms 1040ez   Please click here for the text description of the image. Federal tax forms 1040ez Figure C. Federal tax forms 1040ez John's example Date of the mortgage. Federal tax forms 1040ez   The date you take out your mortgage is the day the loan proceeds are disbursed. Federal tax forms 1040ez This is generally the closing date. Federal tax forms 1040ez You can treat the day you apply in writing for your mortgage as the date you take it out. Federal tax forms 1040ez However, this applies only if you receive the loan proceeds within a reasonable time (such as within 30 days) after your application is approved. Federal tax forms 1040ez If a timely application you make is rejected, a reasonable additional time will be allowed to make a new application. Federal tax forms 1040ez Cost of home or improvements. Federal tax forms 1040ez   To determine your cost, include amounts paid to acquire any interest in a qualified home or to substantially improve the home. Federal tax forms 1040ez   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. Federal tax forms 1040ez Substantial improvement. Federal tax forms 1040ez   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. Federal tax forms 1040ez    Repairs that maintain your home in good condition, such as repainting your home, are not substantial improvements. Federal tax forms 1040ez 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. Federal tax forms 1040ez Acquiring an interest in a home because of a divorce. Federal tax forms 1040ez   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. Federal tax forms 1040ez Part of home not a qualified home. Federal tax forms 1040ez    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 is not a qualified home. Federal tax forms 1040ez See Divided use of your home under Qualified Home in Part I. Federal tax forms 1040ez 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. Federal tax forms 1040ez In addition, debt you incurred to buy, build, or substantially improve your home, to the extent it is more than the home acquisition debt limit (discussed earlier), may qualify as home equity debt. Federal tax forms 1040ez Home equity debt is a mortgage you took out after October 13, 1987, that: Does not qualify as home acquisition debt or as grandfathered debt, and Is secured by your qualified home. Federal tax forms 1040ez Example. Federal tax forms 1040ez You bought your home for cash 10 years ago. Federal tax forms 1040ez You did not 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. Federal tax forms 1040ez This loan is home equity debt. Federal tax forms 1040ez Home equity debt limit. Federal tax forms 1040ez   There is a limit on the amount of debt that can be treated as home equity debt. Federal tax forms 1040ez 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. Federal tax forms 1040ez 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. Federal tax forms 1040ez Example. Federal tax forms 1040ez You own one home that you bought in 2000. Federal tax forms 1040ez Its FMV now is $110,000, and the current balance on your original mortgage (home acquisition debt) is $95,000. Federal tax forms 1040ez Bank M offers you a home mortgage loan of 125% of the FMV of the home less any outstanding mortgages or other liens. Federal tax forms 1040ez To consolidate some of your other debts, you take out a $42,500 home mortgage loan [(125% × $110,000) − $95,000] with Bank M. Federal tax forms 1040ez Your home equity debt is limited to $15,000. Federal tax forms 1040ez 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. Federal tax forms 1040ez Debt higher than limit. Federal tax forms 1040ez   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 is not deductible. Federal tax forms 1040ez But if the proceeds of the loan were used for investment, business, or other deductible purposes, the interest may be deductible. Federal tax forms 1040ez If it is, see the Table 1 Instructions for line 13 for an explanation of how to allocate the excess interest. Federal tax forms 1040ez Part of home not a qualified home. Federal tax forms 1040ez   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 is not a qualified home. Federal tax forms 1040ez See Divided use of your home under Qualified Home in Part I. Federal tax forms 1040ez Fair market value (FMV). Federal tax forms 1040ez    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. Federal tax forms 1040ez 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. Federal tax forms 1040ez Grandfathered Debt 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. Federal tax forms 1040ez To qualify, it must have been secured by your qualified home on October 13, 1987, and at all times after that date. Federal tax forms 1040ez How you used the proceeds does not matter. Federal tax forms 1040ez Grandfathered debt is not limited. Federal tax forms 1040ez All of the interest you paid on grandfathered debt is fully deductible home mortgage interest. Federal tax forms 1040ez 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. Federal tax forms 1040ez Refinanced grandfathered debt. Federal tax forms 1040ez   If you refinanced grandfathered debt after October 13, 1987, for an amount that was not more than the mortgage principal left on the debt, then you still treat it as grandfathered debt. Federal tax forms 1040ez 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). Federal tax forms 1040ez The debt must be secured by the qualified home. Federal tax forms 1040ez   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. Federal tax forms 1040ez After that, you treat it as home acquisition debt or home equity debt, depending on how you used the proceeds. Federal tax forms 1040ez Exception. Federal tax forms 1040ez   If the debt before refinancing was like a balloon note (the principal on the debt was not amortized over the term of the debt), then you treat the refinanced debt as grandfathered debt for the term of the first refinancing. Federal tax forms 1040ez This term cannot be more than 30 years. Federal tax forms 1040ez Example. Federal tax forms 1040ez Chester took out a $200,000 first mortgage on his home in 1986. Federal tax forms 1040ez The mortgage was a five-year balloon note and the entire balance on the note was due in 1991. Federal tax forms 1040ez Chester refinanced the debt in 1991 with a new 20-year mortgage. Federal tax forms 1040ez The refinanced debt is treated as grandfathered debt for its entire term (20 years). Federal tax forms 1040ez Line-of-credit mortgage. Federal tax forms 1040ez    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. Federal tax forms 1040ez The balance on the mortgage before you borrowed the additional amounts is grandfathered debt. Federal tax forms 1040ez The newly borrowed amounts are not grandfathered debt because the funds were borrowed after October 13, 1987. Federal tax forms 1040ez See Average Mortgage Balance in the Table 1 Instructions that follow. Federal tax forms 1040ez Table 1 Instructions Unless you are 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. Federal tax forms 1040ez All the mortgages are grandfathered debt. Federal tax forms 1040ez The total of the mortgage balances for the entire year is within the limits discussed earlier under Home Acquisition Debt and Home Equity Debt . Federal tax forms 1040ez In either of those cases, you do not need Table 1. Federal tax forms 1040ez Otherwise, you can use Table 1 to determine your qualified loan limit and deductible home mortgage interest. Federal tax forms 1040ez Fill out only one Table 1 for both your main and second home regardless of how many mortgages you have. Federal tax forms 1040ez Table 1. Federal tax forms 1040ez Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. Federal tax forms 1040ez Part I Qualified Loan Limit 1. Federal tax forms 1040ez Enter the average balance of all your grandfathered debt. Federal tax forms 1040ez See line 1 instructions 1. Federal tax forms 1040ez   2. Federal tax forms 1040ez Enter the average balance of all your home acquisition debt. Federal tax forms 1040ez See line 2 instructions 2. Federal tax forms 1040ez   3. Federal tax forms 1040ez Enter $1,000,000 ($500,000 if married filing separately) 3. Federal tax forms 1040ez   4. Federal tax forms 1040ez Enter the larger of the amount on line 1 or the amount on line 3 4. Federal tax forms 1040ez   5. Federal tax forms 1040ez Add the amounts on lines 1 and 2. Federal tax forms 1040ez Enter the total here 5. Federal tax forms 1040ez   6. Federal tax forms 1040ez Enter the smaller of the amount on line 4 or the amount on line 5 6. Federal tax forms 1040ez   7. Federal tax forms 1040ez If you have home equity debt, enter the smaller of $100,000 ($50,000 if married filing separately) or your limited amount. Federal tax forms 1040ez See the line 7 instructions for the limit which may apply to you. Federal tax forms 1040ez 7. Federal tax forms 1040ez   8. Federal tax forms 1040ez Add the amounts on lines 6 and 7. Federal tax forms 1040ez Enter the total. Federal tax forms 1040ez This is your qualified loan limit. Federal tax forms 1040ez 8. Federal tax forms 1040ez   Part II Deductible Home Mortgage Interest 9. Federal tax forms 1040ez Enter the total of the average balances of all mortgages on all qualified homes. Federal tax forms 1040ez  See line 9 instructions 9. Federal tax forms 1040ez     If line 8 is less than line 9, go on to line 10. Federal tax forms 1040ez If line 8 is equal to or more than line 9, stop here. Federal tax forms 1040ez All of your interest on all the mortgages included on line 9 is deductible as home mortgage interest on Schedule A (Form 1040). Federal tax forms 1040ez     10. Federal tax forms 1040ez Enter the total amount of interest that you paid. Federal tax forms 1040ez See line 10 instructions 10. Federal tax forms 1040ez   11. Federal tax forms 1040ez Divide the amount on line 8 by the amount on line 9. Federal tax forms 1040ez Enter the result as a decimal amount (rounded to three places) 11. Federal tax forms 1040ez × . Federal tax forms 1040ez 12. Federal tax forms 1040ez Multiply the amount on line 10 by the decimal amount on line 11. Federal tax forms 1040ez Enter the result. Federal tax forms 1040ez This is your deductible home mortgage interest. Federal tax forms 1040ez Enter this amount on Schedule A (Form 1040) 12. Federal tax forms 1040ez   13. Federal tax forms 1040ez Subtract the amount on line 12 from the amount on line 10. Federal tax forms 1040ez Enter the result. Federal tax forms 1040ez This is not home mortgage interest. Federal tax forms 1040ez See line 13 instructions 13. Federal tax forms 1040ez   Home equity debt only. Federal tax forms 1040ez   If all of your mortgages are home equity debt, do not fill in lines 1 through 5. Federal tax forms 1040ez Enter zero on line 6 and complete the rest of Table 1. Federal tax forms 1040ez Average Mortgage Balance You have to figure the average balance of each mortgage to determine your qualified loan limit. Federal tax forms 1040ez You need these amounts to complete lines 1, 2, and 9 of Table 1. Federal tax forms 1040ez You can use the highest mortgage balances during the year, but you may benefit most by using the average balances. Federal tax forms 1040ez The following are methods you can use to figure your average mortgage balances. Federal tax forms 1040ez However, if a mortgage has more than one category of debt, see Mixed-use mortgages , later, in this section. Federal tax forms 1040ez Average of first and last balance method. Federal tax forms 1040ez   You can use this method if all the following apply. Federal tax forms 1040ez You did not borrow any new amounts on the mortgage during the year. Federal tax forms 1040ez (This does not include borrowing the original mortgage amount. Federal tax forms 1040ez ) You did not prepay more than one month's principal during the year. Federal tax forms 1040ez (This includes prepayment by refinancing your home or by applying proceeds from its sale. Federal tax forms 1040ez ) You had to make level payments at fixed equal intervals on at least a semi-annual basis. Federal tax forms 1040ez You treat your payments as level even if they were adjusted from time to time because of changes in the interest rate. Federal tax forms 1040ez    To figure your average balance, complete the following worksheet. Federal tax forms 1040ez    1. Federal tax forms 1040ez 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. Federal tax forms 1040ez 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. Federal tax forms 1040ez Add amounts on lines 1 and 2   4. Federal tax forms 1040ez Divide the amount on line 3 by 2. Federal tax forms 1040ez Enter the result   Interest paid divided by interest rate method. Federal tax forms 1040ez   You can use this method if at all times in 2013 the mortgage was secured by your qualified home and the interest was paid at least monthly. Federal tax forms 1040ez    Complete the following worksheet to figure your average balance. Federal tax forms 1040ez    1. Federal tax forms 1040ez Enter the interest paid in 2013. Federal tax forms 1040ez Do not include points, mortgage insurance premiums, or any interest paid in 2013 that is for a year after 2013. Federal tax forms 1040ez However, do include interest that is for 2013 but was paid in an earlier year   2. Federal tax forms 1040ez Enter the annual interest rate on the mortgage. Federal tax forms 1040ez If the interest rate varied in 2013, use the lowest rate for the year   3. Federal tax forms 1040ez Divide the amount on line 1 by the amount on line 2. Federal tax forms 1040ez Enter the result   Example. Federal tax forms 1040ez Mr. Federal tax forms 1040ez Blue had a line of credit secured by his main home all year. Federal tax forms 1040ez He paid interest of $2,500 on this loan. Federal tax forms 1040ez The interest rate on the loan was 9% (. Federal tax forms 1040ez 09) all year. Federal tax forms 1040ez His average balance using this method is $27,778, figured as follows. Federal tax forms 1040ez 1. Federal tax forms 1040ez Enter the interest paid in 2013. Federal tax forms 1040ez Do not include points, mortgage insurance premiums, or any interest paid in 2013 that is for a year after 2013. Federal tax forms 1040ez However, do include interest that is for 2013 but was paid in an earlier year $2,500 2. Federal tax forms 1040ez Enter the annual interest rate on the mortgage. Federal tax forms 1040ez If the interest rate varied in 2013, use the lowest rate for the year . Federal tax forms 1040ez 09 3. Federal tax forms 1040ez Divide the amount on line 1 by the amount on line 2. Federal tax forms 1040ez Enter the result $27,778 Statements provided by your lender. Federal tax forms 1040ez   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. Federal tax forms 1040ez You can treat the balance as zero for any month the mortgage was not secured by your qualified home. Federal tax forms 1040ez   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. Federal tax forms 1040ez   If your lender can give you your average balance for the year, you can use that amount. Federal tax forms 1040ez Example. Federal tax forms 1040ez Ms. Federal tax forms 1040ez Brown had a home equity loan secured by her main home all year. Federal tax forms 1040ez She received monthly statements showing her average balance for each month. Federal tax forms 1040ez She can figure her average balance for the year by adding her monthly average balances and dividing the total by 12. Federal tax forms 1040ez Mixed-use mortgages. Federal tax forms 1040ez   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). Federal tax forms 1040ez 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). Federal tax forms 1040ez   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. Federal tax forms 1040ez Do not use the methods described earlier in this section to figure the average balance of either category. Federal tax forms 1040ez Instead, for each category, use the following method. Federal tax forms 1040ez Figure the balance of that category of debt for each month. Federal tax forms 1040ez 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. Federal tax forms 1040ez 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: First, any home equity debt, Next, any grandfathered debt, and Finally, any home acquisition debt. Federal tax forms 1040ez Add together the monthly balances figured in (1). Federal tax forms 1040ez Divide the result in (2) by 12. Federal tax forms 1040ez   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. Federal tax forms 1040ez Example 1. Federal tax forms 1040ez In 1986, Sharon took out a $1,400,000 mortgage to buy her main home (grandfathered debt). Federal tax forms 1040ez On March 2, 2013, 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. Federal tax forms 1040ez 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). Federal tax forms 1040ez Under the loan agreement, Sharon must make principal payments of $1,000 at the end of each month. Federal tax forms 1040ez During 2013, her principal payments on the second mortgage totaled $10,000. Federal tax forms 1040ez 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. Federal tax forms 1040ez The January and February balances were zero. Federal tax forms 1040ez The March through December balances were all $180,000, because none of her principal payments are applied to the home acquisition debt. Federal tax forms 1040ez (They are all applied to the home equity debt, reducing it to $10,000 [$20,000 − $10,000]. Federal tax forms 1040ez ) The monthly balances of the home acquisition debt total $1,800,000 ($180,000 × 10). Federal tax forms 1040ez Therefore, the average balance of the home acquisition debt for 2013 was $150,000 ($1,800,000 ÷ 12). Federal tax forms 1040ez Example 2. Federal tax forms 1040ez The facts are the same as in Example 1. Federal tax forms 1040ez In 2014, Sharon's January through October principal payments on her second mortgage are applied to the home equity debt, reducing it to zero. Federal tax forms 1040ez The balance of the home acquisition debt remains $180,000 for each of those months. Federal tax forms 1040ez 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). Federal tax forms 1040ez The monthly balances total $2,157,000 [($180,000 × 10) + $179,000 + $178,000]. Federal tax forms 1040ez Therefore, the average balance of the home acquisition debt for 2014 is $179,750 ($2,157,000 ÷ 12). Federal tax forms 1040ez L