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Tax Amend Form

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Tax Amend Form

Tax amend form Publication 936 - Main Content Table of Contents Part I. Tax amend form 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. Tax amend form 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. Tax amend form Home Mortgage Interest This part explains what you can deduct as home mortgage interest. Tax amend form It includes discussions on points, mortgage insurance premiums, and how to report deductible interest on your tax return. Tax amend form Generally, home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home). Tax amend form The loan may be a mortgage to buy your home, a second mortgage, a line of credit, or a home equity loan. Tax amend form You can deduct home mortgage interest if all the following conditions are met. Tax amend form You file Form 1040 and itemize deductions on Schedule A (Form 1040). Tax amend form The mortgage is a secured debt on a qualified home in which you have an ownership interest. Tax amend form Secured Debt and Qualified Home are explained later. Tax amend form  Both you and the lender must intend that the loan be repaid. Tax amend form Fully deductible interest. Tax amend form   In most cases, you can deduct all of your home mortgage interest. Tax amend form How much you can deduct depends on the date of the mortgage, the amount of the mortgage, and how you use the mortgage proceeds. Tax amend form   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. Tax amend form (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. Tax amend form ) 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. Tax amend form   The three categories are as follows. Tax amend form Mortgages you took out on or before October 13, 1987 (called grandfathered debt). Tax amend form 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). Tax amend form 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). Tax amend form The dollar limits for the second and third categories apply to the combined mortgages on your main home and second home. Tax amend form   See Part II for more detailed definitions of grandfathered, home acquisition, and home equity debt. Tax amend form    You can use Figure A to check whether your home mortgage interest is fully deductible. Tax amend form This image is too large to be displayed in the current screen. Tax amend form Please click the link to view the image. Tax amend form Figure A. Tax amend form Is My Home Mortgage Interest Fully Deductible? Secured Debt You can deduct your home mortgage interest only if your mortgage is a secured debt. Tax amend form 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. Tax amend form In other words, your mortgage is a secured debt if you put your home up as collateral to protect the interests of the lender. Tax amend form If you cannot pay the debt, your home can then serve as payment to the lender to satisfy (pay) the debt. Tax amend form In this publication, mortgage will refer to secured debt. Tax amend form Debt not secured by home. Tax amend form   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). Tax amend form   A debt is not secured by your home if it once was, but is no longer secured by your home. Tax amend form Wraparound mortgage. Tax amend form   This is not a secured debt unless it is recorded or otherwise perfected under state law. Tax amend form Example. Tax amend form Beth owns a home subject to a mortgage of $40,000. Tax amend form She sells the home for $100,000 to John, who takes it subject to the $40,000 mortgage. Tax amend form Beth continues to make the payments on the $40,000 note. Tax amend form John pays $10,000 down and gives Beth a $90,000 note secured by a wraparound mortgage on the home. Tax amend form Beth does not record or otherwise perfect the $90,000 mortgage under the state law that applies. Tax amend form Therefore, the mortgage is not a secured debt and John cannot deduct any of the interest he pays on it as home mortgage interest. Tax amend form Choice to treat the debt as not secured by your home. Tax amend form   You can choose to treat any debt secured by your qualified home as not secured by the home. Tax amend form This treatment begins with the tax year for which you make the choice and continues for all later tax years. Tax amend form You can revoke your choice only with the consent of the Internal Revenue Service (IRS). Tax amend form   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. Tax amend form 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. Tax amend form Cooperative apartment owner. Tax amend form   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. Tax amend form Qualified Home For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. Tax amend form This means your main home or your second home. Tax amend form A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities. Tax amend form 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. Tax amend form Otherwise, it is considered personal interest and is not deductible. Tax amend form Main home. Tax amend form   You can have only one main home at any one time. Tax amend form This is the home where you ordinarily live most of the time. Tax amend form Second home. Tax amend form   A second home is a home that you choose to treat as your second home. Tax amend form Second home not rented out. Tax amend form   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. Tax amend form You do not have to use the home during the year. Tax amend form Second home rented out. Tax amend form   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. Tax amend form 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. Tax amend form If you do not use the home long enough, it is considered rental property and not a second home. Tax amend form For information on residential rental property, see Publication 527. Tax amend form More than one second home. Tax amend form   If you have more than one second home, you can treat only one as the qualified second home during any year. Tax amend form However, you can change the home you treat as a second home during the year in the following situations. Tax amend form 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. Tax amend form 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. Tax amend form 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. Tax amend form Divided use of your home. Tax amend form   The only part of your home that is considered a qualified home is the part you use for residential living. Tax amend form 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. Tax amend form 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. Tax amend form 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. Tax amend form (See Home Acquisition Debt in Part II. Tax amend form ) Dividing the fair market value may affect your home equity debt limit, also explained in Part II . Tax amend form Renting out part of home. Tax amend form   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. Tax amend form The rented part of your home is used by the tenant primarily for residential living. Tax amend form The rented part of your home is not a self-contained residential unit having separate sleeping, cooking, and toilet facilities. Tax amend form 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. Tax amend form If two persons (and dependents of either) share the same sleeping quarters, they are treated as one tenant. Tax amend form Office in home. Tax amend form   If you have an office in your home that you use in your business, see Publication 587, Business Use of Your Home. Tax amend form It explains how to figure your deduction for the business use of your home, which includes the business part of your home mortgage interest. Tax amend form Home under construction. Tax amend form   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. Tax amend form   The 24-month period can start any time on or after the day construction begins. Tax amend form Home destroyed. Tax amend form   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. Tax amend form This means you can continue to deduct the interest you pay on your home mortgage, subject to the limits described in this publication. Tax amend form   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. Tax amend form   This rule applies to your main home and to a second home that you treat as a qualified home. Tax amend form Time-sharing arrangements. Tax amend form   You can treat a home you own under a time-sharing plan as a qualified home if it meets all the requirements. Tax amend form 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. Tax amend form Rental of time-share. Tax amend form   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. Tax amend form See Second home rented out , earlier, for the use requirement. Tax amend form 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. Tax amend form Married taxpayers. Tax amend form   If you are married and file a joint return, your qualified home(s) can be owned either jointly or by only one spouse. Tax amend form Separate returns. Tax amend form   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. Tax amend form However, if you both consent in writing, then one spouse can take both the main home and a second home into account. Tax amend form Special Situations This section describes certain items that can be included as home mortgage interest and others that cannot. Tax amend form It also describes certain special situations that may affect your deduction. Tax amend form Late payment charge on mortgage payment. Tax amend form   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. Tax amend form Mortgage prepayment penalty. Tax amend form   If you pay off your home mortgage early, you may have to pay a penalty. Tax amend form 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. Tax amend form Sale of home. Tax amend form   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. Tax amend form Example. Tax amend form John and Peggy Harris sold their home on May 7. Tax amend form Through April 30, they made home mortgage interest payments of $1,220. Tax amend form 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. Tax amend form Their mortgage interest deduction is $1,270 ($1,220 + $50). Tax amend form Prepaid interest. Tax amend form   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. Tax amend form You can deduct in each year only the interest that qualifies as home mortgage interest for that year. Tax amend form However, there is an exception that applies to points, discussed later. Tax amend form Mortgage interest credit. Tax amend form    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. Tax amend form Figure the credit on Form 8396, Mortgage Interest Credit. Tax amend form If you take this credit, you must reduce your mortgage interest deduction by the amount of the credit. Tax amend form   See Form 8396 and Publication 530 for more information on the mortgage interest credit. Tax amend form Ministers' and military housing allowance. Tax amend form   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. Tax amend form Hardest Hit Fund and Emergency Homeowners' Loan Programs. Tax amend form   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. Tax amend form 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. Tax amend form 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. Tax amend form 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). Tax amend form 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. Tax amend form Mortgage assistance payments under section 235 of the National Housing Act. Tax amend form   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. Tax amend form You cannot deduct the interest that is paid for you. Tax amend form No other effect on taxes. Tax amend form   Do not include these mortgage assistance payments in your income. Tax amend form Also, do not use these payments to reduce other deductions, such as real estate taxes. Tax amend form Divorced or separated individuals. Tax amend form   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. Tax amend form See the discussion of Payments for jointly-owned home under Alimony in Publication 504, Divorced or Separated Individuals. Tax amend form Redeemable ground rents. Tax amend form   In some states (such as Maryland), you can buy your home subject to a ground rent. Tax amend form A ground rent is an obligation you assume to pay a fixed amount per year on the property. Tax amend form Under this arrangement, you are leasing (rather than buying) the land on which your home is located. Tax amend form   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct them as mortgage interest. Tax amend form   A ground rent is a redeemable ground rent if all of the following are true. Tax amend form Your lease, including renewal periods, is for more than 15 years. Tax amend form You can freely assign the lease. Tax amend form 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. Tax amend form The lessor's interest in the land is primarily a security interest to protect the rental payments to which he or she is entitled. Tax amend form   Payments made to end the lease and to buy the lessor's entire interest in the land are not deductible as mortgage interest. Tax amend form Nonredeemable ground rents. Tax amend form   Payments on a nonredeemable ground rent are not mortgage interest. Tax amend form You can deduct them as rent if they are a business expense or if they are for rental property. Tax amend form Reverse mortgages. Tax amend form   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. Tax amend form With a reverse mortgage, you retain title to your home. Tax amend form 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. Tax amend form Because reverse mortgages are considered loan advances and not income, the amount you receive is not taxable. Tax amend form 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. Tax amend form Your deduction may be limited because a reverse mortgage loan generally is subject to the limit on Home Equity Debt discussed in Part II. Tax amend form Rental payments. Tax amend form   If you live in a house before final settlement on the purchase, any payments you make for that period are rent and not interest. Tax amend form This is true even if the settlement papers call them interest. Tax amend form You cannot deduct these payments as home mortgage interest. Tax amend form Mortgage proceeds invested in tax-exempt securities. Tax amend form   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. Tax amend form “Grandfathered debt” and “home equity debt” are defined in Part II of this publication. Tax amend form Refunds of interest. Tax amend form   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. Tax amend form 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. Tax amend form However, you need to include it only up to the amount of the deduction that reduced your tax in the earlier year. Tax amend form This is true whether the interest overcharge was refunded to you or was used to reduce the outstanding principal on your mortgage. Tax amend form If you need to include the refund in income, report it on Form 1040, line 21. Tax amend form   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. Tax amend form For information about Form 1098, see Form 1098, Mortgage Interest Statement , later. Tax amend form   For more information on how to treat refunds of interest deducted in earlier years, see Recoveries in Publication 525, Taxable and Nontaxable Income. Tax amend form Cooperative apartment owner. Tax amend form   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. Tax amend form The patronage dividend is a partial refund to the cooperative housing corporation of mortgage interest it paid in a prior year. Tax amend form   If you receive a Form 1098 from the cooperative housing corporation, the form should show only the amount you can deduct. Tax amend form Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Tax amend form Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points. Tax amend form This image is too large to be displayed in the current screen. Tax amend form Please click the link to view the image. Tax amend form Figure B. Tax amend form 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. Tax amend form See Points paid by the seller , later. Tax amend form General Rule You generally cannot deduct the full amount of points in the year paid. Tax amend form Because they are prepaid interest, you generally deduct them ratably over the life (term) of the mortgage. Tax amend form See Deduction Allowed Ratably , next. Tax amend form For exceptions to the general rule, see Deduction Allowed in Year Paid , later. Tax amend form 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. Tax amend form You use the cash method of accounting. Tax amend form This means you report income in the year you receive it and deduct expenses in the year you pay them. Tax amend form Most individuals use this method. Tax amend form Your loan is secured by a home. Tax amend form (The home does not need to be your main home. Tax amend form ) Your loan period is not more than 30 years. Tax amend form 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. Tax amend form 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. Tax amend form Example. Tax amend form You use the cash method of accounting. Tax amend form In 2013, you took out a $100,000 loan payable over 20 years. Tax amend form The terms of the loan are the same as for other 20-year loans offered in your area. Tax amend form You paid $4,800 in points. Tax amend form You made 3 monthly payments on the loan in 2013. Tax amend form You can deduct $60 [($4,800 ÷ 240 months) x 3 payments] in 2013. Tax amend form In 2014, if you make all twelve payments, you will be able to deduct $240 ($20 x 12). Tax amend form Deduction Allowed in Year Paid You can fully deduct points in the year paid if you meet all the following tests. Tax amend form (You can use Figure B as a quick guide to see whether your points are fully deductible in the year paid. Tax amend form ) Your loan is secured by your main home. Tax amend form (Your main home is the one you ordinarily live in most of the time. Tax amend form ) Paying points is an established business practice in the area where the loan was made. Tax amend form The points paid were not more than the points generally charged in that area. Tax amend form You use the cash method of accounting. Tax amend form This means you report income in the year you receive it and deduct expenses in the year you pay them. Tax amend form Most individuals use this method. Tax amend form 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. Tax amend form The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. Tax amend form The funds you provided are not required to have been applied to the points. Tax amend form They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. Tax amend form You cannot have borrowed these funds from your lender or mortgage broker. Tax amend form You use your loan to buy or build your main home. Tax amend form The points were computed as a percentage of the principal amount of the mortgage. Tax amend form The amount is clearly shown on the settlement statement (such as the Settlement Statement, Form HUD-1) as points charged for the mortgage. Tax amend form The points may be shown as paid from either your funds or the seller's. Tax amend form Note. Tax amend form 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. Tax amend form Home improvement loan. Tax amend form   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. Tax amend form Second home. Tax amend form You cannot fully deduct in the year paid points you pay on loans secured by your second home. Tax amend form You can deduct these points only over the life of the loan. Tax amend form Refinancing. Tax amend form   Generally, points you pay to refinance a mortgage are not deductible in full in the year you pay them. Tax amend form This is true even if the new mortgage is secured by your main home. Tax amend form   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. Tax amend form You can deduct the rest of the points over the life of the loan. Tax amend form Example 1. Tax amend form In 1998, Bill Fields got a mortgage to buy a home. Tax amend form In 2013, Bill refinanced that mortgage with a 15-year $100,000 mortgage loan. Tax amend form The mortgage is secured by his home. Tax amend form To get the new loan, he had to pay three points ($3,000). Tax amend form 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. Tax amend form Bill paid the points out of his private funds, rather than out of the proceeds of the new loan. Tax amend form The payment of points is an established practice in the area, and the points charged are not more than the amount generally charged there. Tax amend form Bill's first payment on the new loan was due July 1. Tax amend form He made six payments on the loan in 2013 and is a cash basis taxpayer. Tax amend form Bill used the funds from the new mortgage to repay his existing mortgage. Tax amend form 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. Tax amend form He cannot deduct all of the points in 2013. Tax amend form He can deduct two points ($2,000) ratably over the life of the loan. Tax amend form He deducts $67 [($2,000 ÷ 180 months) × 6 payments] of the points in 2013. Tax amend form The other point ($1,000) was a fee for services and is not deductible. Tax amend form Example 2. Tax amend form 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. Tax amend form Bill deducts 25% ($25,000 ÷ $100,000) of the points ($2,000) in 2013. Tax amend form His deduction is $500 ($2,000 × 25%). Tax amend form Bill also deducts the ratable part of the remaining $1,500 ($2,000 − $500) that must be spread over the life of the loan. Tax amend form This is $50 [($1,500 ÷ 180 months) × 6 payments] in 2013. Tax amend form The total amount Bill deducts in 2013 is $550 ($500 + $50). Tax amend form Special Situations This section describes certain special situations that may affect your deduction of points. Tax amend form Original issue discount. Tax amend form   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. Tax amend form This reduction results in original issue discount, which is discussed in chapter 4 of Publication 535. Tax amend form Amounts charged for services. Tax amend form    Amounts charged by the lender for specific services connected to the loan are not interest. Tax amend form Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. Tax amend form  You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. Tax amend form Points paid by the seller. Tax amend form   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. Tax amend form Treatment by seller. Tax amend form   The seller cannot deduct these fees as interest. Tax amend form But they are a selling expense that reduces the amount realized by the seller. Tax amend form See Publication 523 for information on selling your home. Tax amend form Treatment by buyer. Tax amend form   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. Tax amend form If all the tests under Deduction Allowed in Year Paid , earlier, are met, the buyer can deduct the points in the year paid. Tax amend form If any of those tests are not met, the buyer deducts the points over the life of the loan. Tax amend form   If you need information about the basis of your home, see Publication 523 or Publication 530. Tax amend form Funds provided are less than points. Tax amend form   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. Tax amend form In addition, you can deduct any points paid by the seller. Tax amend form Example 1. Tax amend form When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). Tax amend form You meet all the tests for deducting points in the year paid, except the only funds you provided were a $750 down payment. Tax amend form Of the $1,000 charged for points, you can deduct $750 in the year paid. Tax amend form You spread the remaining $250 over the life of the mortgage. Tax amend form Example 2. Tax amend form 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. Tax amend form In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). Tax amend form You spread the remaining $250 over the life of the mortgage. Tax amend form You must reduce the basis of your home by the $1,000 paid by the seller. Tax amend form Excess points. Tax amend form   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. Tax amend form You must spread any additional points over the life of the mortgage. Tax amend form Mortgage ending early. Tax amend form   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. Tax amend form However, if you refinance the mortgage with the same lender, you cannot deduct any remaining balance of spread points. Tax amend form Instead, deduct the remaining balance over the term of the new loan. Tax amend form   A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. Tax amend form Example. Tax amend form Dan paid $3,000 in points in 2002 that he had to spread out over the 15-year life of the mortgage. Tax amend form He deducts $200 points per year. Tax amend form Through 2012, Dan has deducted $2,200 of the points. Tax amend form Dan prepaid his mortgage in full in 2013. Tax amend form He can deduct the remaining $800 of points in 2013. Tax amend form Limits on deduction. Tax amend form   You cannot fully deduct points paid on a mortgage that exceeds the limits discussed in Part II . Tax amend form See the Table 1 Instructions for line 10. Tax amend form Form 1098. Tax amend form    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. Tax amend form See Form 1098, Mortgage Interest Statement , later. Tax amend form Mortgage Insurance Premiums You can treat amounts you paid during 2013 for qualified mortgage insurance as home mortgage interest. Tax amend form The insurance must be in connection with home acquisition debt, and the insurance contract must have been issued after 2006. Tax amend form Qualified mortgage insurance. Tax amend form   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). Tax amend form   Mortgage insurance provided by the Department of Veterans Affairs is commonly known as a funding fee. Tax amend form If provided by the Rural Housing Service, it is commonly known as a guarantee fee. Tax amend form 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. Tax amend form These fees can be deducted fully in 2013 if the mortgage insurance contract was issued in 2013. Tax amend form Contact the mortgage insurance issuer to determine the deductible amount if it is not reported in box 4 of Form 1098. Tax amend form Special rules for prepaid mortgage insurance. Tax amend form   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. Tax amend form 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. Tax amend form No deduction is allowed for the unamortized balance if the mortgage is satisfied before its term. Tax amend form This paragraph does not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or the Rural Housing Service. Tax amend form Example. Tax amend form Ryan purchased a home in May of 2012 and financed the home with a 15-year mortgage. Tax amend form Ryan also prepaid all of the $9,240 in private mortgage insurance required at the time of closing in May. Tax amend form 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. Tax amend form Ryan's adjusted gross income (AGI) for 2012 is $76,000. Tax amend form Ryan can deduct $880 ($9,240 ÷ 84 x 8 months) for qualified mortgage insurance premiums in 2012. Tax amend form For 2013, Ryan can deduct $1,320 ($9,240 ÷ 84 x 12 months) if his AGI is $100,000 or less. Tax amend form 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). Tax amend form Limit on deduction. Tax amend form   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. Tax amend form 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. Tax amend form If your adjusted gross income is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. Tax amend form Form 1098. Tax amend form   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. Tax amend form See Form 1098, Mortgage Interest Statement, next. Tax amend form 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. Tax amend form 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. Tax amend form A governmental unit is a person for purposes of furnishing the statement. Tax amend form The statement for each year should be sent to you by January 31 of the following year. Tax amend form A copy of this form will also be sent to the IRS. Tax amend form 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. Tax amend form However, it should not show any interest that was paid for you by a government agency. Tax amend form As a general rule, Form 1098 will include only points that you can fully deduct in the year paid. Tax amend form However, certain points not included on Form 1098 also may be deductible, either in the year paid or over the life of the loan. Tax amend form See the earlier discussion of Points to determine whether you can deduct points not shown on Form 1098. Tax amend form Prepaid interest on Form 1098. Tax amend form   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. Tax amend form However, you cannot deduct the prepaid amount for January 2014 in 2013. Tax amend form (See Prepaid interest , earlier. Tax amend form ) You will have to figure the interest that accrued for 2014 and subtract it from the amount in box 1. Tax amend form You will include the interest for January 2014 with other interest you pay for 2014. Tax amend form Refunded interest. Tax amend form   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. Tax amend form See Refunds of interest , earlier. Tax amend form Mortgage insurance premiums. Tax amend form   The amount of mortgage insurance premiums you paid during 2013 may be shown in Box 4 of Form 1098. Tax amend form See Mortgage Insurance Premiums , earlier. Tax amend form How To Report Deduct the home mortgage interest and points reported to you on Form 1098 on Schedule A (Form 1040), line 10. Tax amend form 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. Tax amend form Attach a statement explaining the difference and print “See attached” next to line 10. Tax amend form Deduct home mortgage interest that was not reported to you on Form 1098 on Schedule A (Form 1040), line 11. Tax amend form 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. Tax amend form The seller must give you this number and you must give the seller your TIN. Tax amend form A Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Tax amend form Failure to meet any of these requirements may result in a $50 penalty for each failure. Tax amend form 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. Tax amend form 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. Tax amend form Deduct mortgage insurance premiums on Schedule A (Form 1040), line 13. Tax amend form More than one borrower. Tax amend form   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. Tax amend form Show how much of the interest each of you paid, and give the name and address of the person who received the form. Tax amend form Deduct your share of the interest on Schedule A (Form 1040), line 11, and print “See attached” next to the line. Tax amend form Also, deduct your share of any qualified mortgage insurance premiums on Schedule A (Form 1040), line 13. Tax amend form   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. Tax amend form Let each of the other borrowers know what his or her share is. Tax amend form Mortgage proceeds used for business or investment. Tax amend form   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. Tax amend form It shows where to deduct the part of your excess interest that is for those activities. Tax amend form 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. Tax amend form Special Rule for Tenant-Stockholders in Cooperative Housing Corporations A qualified home includes stock in a cooperative housing corporation owned by a tenant-stockholder. Tax amend form This applies only if the tenant-stockholder is entitled to live in the house or apartment because of owning stock in the cooperative. Tax amend form Cooperative housing corporation. Tax amend form   This is a corporation that meets all of the following conditions. Tax amend form 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. Tax amend form Receives at least 80% of its gross income for the year in which the mortgage interest is paid or incurred from tenant-stockholders. Tax amend form For this purpose, gross income is all income received during the entire year, including amounts received before the corporation changed to cooperative ownership. Tax amend form 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. Tax amend form 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. Tax amend form Stock used to secure debt. Tax amend form   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). Tax amend form 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. Tax amend form See chapter 4 of Publication 535 for details on these rules. Tax amend form Figuring deductible home mortgage interest. Tax amend form   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. Tax amend form 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. Tax amend form   Figure your share of this interest by multiplying the total by the following fraction. Tax amend form      Your shares of stock in the cooperative   The total shares of stock in the cooperative Limits on deduction. Tax amend form   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. Tax amend form The cooperative should determine your share of its grandfathered debt, its home acquisition debt, and its home equity debt. Tax amend form (Your share of each of these types of debt is equal to the average balance of each debt multiplied by the fraction just given. Tax amend form ) 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. Tax amend form Form 1098. Tax amend form    The cooperative should give you a Form 1098 showing your share of the interest. Tax amend form Use the rules in this publication to determine your deductible mortgage interest. Tax amend form Part II. Tax amend form Limits on Home Mortgage Interest Deduction This part of the publication discusses the limits on deductible home mortgage interest. Tax amend form 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 . Tax amend form 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. Tax amend form 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. Tax amend form Table 1 can help you figure your qualified loan limit and your deductible home mortgage interest. Tax amend form 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). Tax amend form It also must be secured by that home. Tax amend form 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. Tax amend form The additional debt may qualify as home equity debt (discussed later). Tax amend form Home acquisition debt limit. Tax amend form   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). Tax amend form This limit is reduced (but not below zero) by the amount of your grandfathered debt (discussed later). Tax amend form Debt over this limit may qualify as home equity debt (also discussed later). Tax amend form Refinanced home acquisition debt. Tax amend form   Any secured debt you use to refinance home acquisition debt is treated as home acquisition debt. Tax amend form 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. Tax amend form 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). Tax amend form Mortgage that qualifies later. Tax amend form   A mortgage that does not qualify as home acquisition debt because it does not meet all the requirements may qualify at a later time. Tax amend form 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. Tax amend form However, if the debt is later secured by the home, it may qualify as home acquisition debt after that time. Tax amend form Similarly, a debt that you use to buy property may not qualify because the property is not a qualified home. Tax amend form However, if the property later becomes a qualified home, the debt may qualify after that time. Tax amend form Mortgage treated as used to buy, build, or improve home. Tax amend form   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. Tax amend form This applies in the following situations. Tax amend form You buy your home within 90 days before or after the date you take out the mortgage. Tax amend form 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). Tax amend form (See Example 1 later. Tax amend form ) You build or improve your home and take out the mortgage before the work is completed. Tax amend form The home acquisition debt is limited to the amount of the expenses incurred within 24 months before the date of the mortgage. Tax amend form You build or improve your home and take out the mortgage within 90 days after the work is completed. Tax amend form 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. Tax amend form (See Example 2 later. Tax amend form ) Example 1. Tax amend form You bought your main home on June 3 for $175,000. Tax amend form You paid for the home with cash you got from the sale of your old home. Tax amend form On July 15, you took out a mortgage of $150,000 secured by your main home. Tax amend form You used the $150,000 to invest in stocks. Tax amend form 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. Tax amend form The entire mortgage qualifies as home acquisition debt because it was not more than the home's cost. Tax amend form Example 2. Tax amend form On January 31, John began building a home on the lot that he owned. Tax amend form He used $45,000 of his personal funds to build the home. Tax amend form The home was completed on October 31. Tax amend form On November 21, John took out a $36,000 mortgage that was secured by the home. Tax amend form The mortgage can be treated as used to build the home because it was taken out within 90 days after the home was completed. Tax amend form 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. Tax amend form This is illustrated by Figure C. Tax amend form   Please click here for the text description of the image. Tax amend form Figure C. Tax amend form John's example Date of the mortgage. Tax amend form   The date you take out your mortgage is the day the loan proceeds are disbursed. Tax amend form This is generally the closing date. Tax amend form You can treat the day you apply in writing for your mortgage as the date you take it out. Tax amend form However, this applies only if you receive the loan proceeds within a reasonable time (such as within 30 days) after your application is approved. Tax amend form If a timely application you make is rejected, a reasonable additional time will be allowed to make a new application. Tax amend form Cost of home or improvements. Tax amend form   To determine your cost, include amounts paid to acquire any interest in a qualified home or to substantially improve the home. Tax amend form   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. Tax amend form Substantial improvement. Tax amend form   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. Tax amend form    Repairs that maintain your home in good condition, such as repainting your home, are not substantial improvements. Tax amend form 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. Tax amend form Acquiring an interest in a home because of a divorce. Tax amend form   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. Tax amend form Part of home not a qualified home. Tax amend form    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. Tax amend form See Divided use of your home under Qualified Home in Part I. Tax amend form 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. Tax amend form 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. Tax amend form 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. Tax amend form Example. Tax amend form You bought your home for cash 10 years ago. Tax amend form 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. Tax amend form This loan is home equity debt. Tax amend form Home equity debt limit. Tax amend form   There is a limit on the amount of debt that can be treated as home equity debt. Tax amend form 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. Tax amend form 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. Tax amend form Example. Tax amend form You own one home that you bought in 2000. Tax amend form Its FMV now is $110,000, and the current balance on your original mortgage (home acquisition debt) is $95,000. Tax amend form Bank M offers you a home mortgage loan of 125% of the FMV of the home less any outstanding mortgages or other liens. Tax amend form To consolidate some of your other debts, you take out a $42,500 home mortgage loan [(125% × $110,000) − $95,000] with Bank M. Tax amend form Your home equity debt is limited to $15,000. Tax amend form 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. Tax amend form Debt higher than limit. Tax amend form   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. Tax amend form But if the proceeds of the loan were used for investment, business, or other deductible purposes, the interest may be deductible. Tax amend form If it is, see the Table 1 Instructions for line 13 for an explanation of how to allocate the excess interest. Tax amend form Part of home not a qualified home. Tax amend form   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. Tax amend form See Divided use of your home under Qualified Home in Part I. Tax amend form Fair market value (FMV). Tax amend form    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. Tax amend form 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. Tax amend form 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. Tax amend form To qualify, it must have been secured by your qualified home on October 13, 1987, and at all times after that date. Tax amend form How you used the proceeds does not matter. Tax amend form Grandfathered debt is not limited. Tax amend form All of the interest you paid on grandfathered debt is fully deductible home mortgage interest. Tax amend form 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. Tax amend form Refinanced grandfathered debt. Tax amend form   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. Tax amend form 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). Tax amend form The debt must be secured by the qualified home. Tax amend form   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. Tax amend form After that, you treat it as home acquisition debt or home equity debt, depending on how you used the proceeds. Tax amend form Exception. Tax amend form   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. Tax amend form This term cannot be more than 30 years. Tax amend form Example. Tax amend form Chester took out a $200,000 first mortgage on his home in 1986. Tax amend form The mortgage was a five-year balloon note and the entire balance on the note was due in 1991. Tax amend form Chester refinanced the debt in 1991 with a new 20-year mortgage. Tax amend form The refinanced debt is treated as grandfathered debt for its entire term (20 years). Tax amend form Line-of-credit mortgage. Tax amend form    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. Tax amend form The balance on the mortgage before you borrowed the additional amounts is grandfathered debt. Tax amend form The newly borrowed amounts are not grandfathered debt because the funds were borrowed after October 13, 1987. Tax amend form See Average Mortgage Balance in the Table 1 Instructions that follow. Tax amend form 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. Tax amend form All the mortgages are grandfathered debt. Tax amend form The total of the mortgage balances for the entire year is within the limits discussed earlier under Home Acquisition Debt and Home Equity Debt . Tax amend form In either of those cases, you do not need Table 1. Tax amend form Otherwise, you can use Table 1 to determine your qualified loan limit and deductible home mortgage interest. Tax amend form Fill out only one Table 1 for both your main and second home regardless of how many mortgages you have. Tax amend form Table 1. Tax amend form Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. Tax amend form Part I Qualified Loan Limit 1. Tax amend form Enter the average balance of all your grandfathered debt. Tax amend form See line 1 instructions 1. Tax amend form   2. Tax amend form Enter the average balance of all your home acquisition debt. Tax amend form See line 2 instructions 2. Tax amend form   3. Tax amend form Enter $1,000,000 ($500,000 if married filing separately) 3. Tax amend form   4. Tax amend form Enter the larger of the amount on line 1 or the amount on line 3 4. Tax amend form   5. Tax amend form Add the amounts on lines 1 and 2. Tax amend form Enter the total here 5. Tax amend form   6. Tax amend form Enter the smaller of the amount on line 4 or the amount on line 5 6. Tax amend form   7. Tax amend form If you have home equity debt, enter the smaller of $100,000 ($50,000 if married filing separately) or your limited amount. Tax amend form See the line 7 instructions for the limit which may apply to you. Tax amend form 7. Tax amend form   8. Tax amend form Add the amounts on lines 6 and 7. Tax amend form Enter the total. Tax amend form This is your qualified loan limit. Tax amend form 8. Tax amend form   Part II Deductible Home Mortgage Interest 9. Tax amend form Enter the total of the average balances of all mortgages on all qualified homes. Tax amend form  See line 9 instructions 9. Tax amend form     If line 8 is less than line 9, go on to line 10. Tax amend form If line 8 is equal to or more than line 9, stop here. Tax amend form All of your interest on all the mortgages included on line 9 is deductible as home mortgage interest on Schedule A (Form 1040). Tax amend form     10. Tax amend form Enter the total amount of interest that you paid. Tax amend form See line 10 instructions 10. Tax amend form   11. Tax amend form Divide the amount on line 8 by the amount on line 9. Tax amend form Enter the result as a decimal amount (rounded to three places) 11. Tax amend form × . Tax amend form 12. Tax amend form Multiply the amount on line 10 by the decimal amount on line 11. Tax amend form Enter the result. Tax amend form This is your deductible home mortgage interest. Tax amend form Enter this amount on Schedule A (Form 1040) 12. Tax amend form   13. Tax amend form Subtract the amount on line 12 from the amount on line 10. Tax amend form Enter the result. Tax amend form This is not home mortgage interest. Tax amend form See line 13 instructions 13. Tax amend form   Home equity debt only. Tax amend form   If all of your mortgages are home equity debt, do not fill in lines 1 through 5. Tax amend form Enter zero on line 6 and complete the rest of Table 1. Tax amend form Average Mortgage Balance You have to figure the average balance of each mortgage to determine your qualified loan limit. Tax amend form You need these amounts to complete lines 1, 2, and 9 of Table 1. Tax amend form You can use the highest mortgage balances during the year, but you may benefit most by using the average balances. Tax amend form The following are methods you can use to figure your average mortgage balances. Tax amend form However, if a mortgage has more than one category of debt, see Mixed-use mortgages , later, in this section. Tax amend form Average of first and last balance method. Tax amend form   You can use this method if all the following apply. Tax amend form You did not borrow any new amounts on the mortgage during the year. Tax amend form (This does not include borrowing the original mortgage amount. Tax amend form ) You did not prepay more than one month's principal during the year. Tax amend form (This includes prepayment by refinancing your home or by applying proceeds from its sale. Tax amend form ) You had to make level payments at fixed equal intervals on at least a semi-annual basis. Tax amend form You treat your payments as level even if they were adjusted from time to time because of changes in the interest rate. Tax amend form    To figure your average balance, complete the following worksheet. Tax amend form    1. Tax amend form 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. Tax amend form 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. Tax amend form Add amounts on lines 1 and 2   4. Tax amend form Divide the amount on line 3 by 2. Tax amend form Enter the result   Interest paid divided by interest rate method. Tax amend form   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. Tax amend form    Complete the following worksheet to figure your average balance. Tax amend form    1. Tax amend form Enter the interest paid in 2013. Tax amend form Do not include points, mortgage insurance premiums, or any interest paid in 2013 that is for a year after 2013. Tax amend form However, do include interest that is for 2013 but was paid in an earlier year   2. Tax amend form Enter the annual interest rate on the mortgage. Tax amend form If the interest rate varied in 2013, use the lowest rate for the year   3. Tax amend form Divide the amount on line 1 by the amount on line 2. Tax amend form Enter the result   Example. Tax amend form Mr. Tax amend form Blue had a line of credit secured by his main home all year. Tax amend form He paid interest of $2,500 on this loan. Tax amend form The interest rate on the loan was 9% (. Tax amend form 09) all year. Tax amend form His average balance using this method is $27,778, figured as follows. Tax amend form 1. Tax amend form Enter the interest paid in 2013. Tax amend form Do not include points, mortgage insurance premiums, or any interest paid in 2013 that is for a year after 2013. Tax amend form However, do include interest that is for 2013 but was paid in an earlier year $2,500 2. Tax amend form Enter the annual interest rate on the mortgage. Tax amend form If the interest rate varied in 2013, use the lowest rate for the year . Tax amend form 09 3. Tax amend form Divide the amount on line 1 by the amount on line 2. Tax amend form Enter the result $27,778 Statements provided by your lender. Tax amend form   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. Tax amend form You can treat the balance as zero for any month the mortgage was not secured by your qualified home. Tax amend form   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. Tax amend form   If your lender can give you your average balance for the year, you can use that amount. Tax amend form Example. Tax amend form Ms. Tax amend form Brown had a home equity loan secured by her main home all year. Tax amend form She received monthly statements showing her average balance for each month. Tax amend form She can figure her average balance for the year by adding her monthly average balances and dividing the total by 12. Tax amend form Mixed-use mortgages. Tax amend form   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). Tax amend form 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). Tax amend form   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. Tax amend form Do not use the methods described earlier in this section to figure the average balance of either category. Tax amend form Instead, for each category, use the following method. Tax amend form Figure the balance of that category of debt for each month. Tax amend form 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. Tax amend form 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. Tax amend form Add together the monthly balances figured in (1). Tax amend form Divide the result in (2) by 12. Tax amend form   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. Tax amend form Example 1. Tax amend form In 1986, Sharon took out a $1,400,000 mortgage to buy her main home (grandfathered debt). Tax amend form 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. Tax amend form 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). Tax amend form Under the loan agreement, Sharon must make principal payments of $1,000 at the end of each month. Tax amend form During 2013, her principal payments on the second mortgage totaled $10,000. Tax amend form 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. Tax amend form The January and February balances were zero. Tax amend form The March through December balances were all $180,000, because none of her principal payments are applied to the home acquisition debt. Tax amend form (They are all applied to the home equity debt, reducing it to $10,000 [$20,000 − $10,000]. Tax amend form ) The monthly balances of the home acquisition debt total $1,800,000 ($180,000 × 10). Tax amend form Therefore, the average balance of the home acquisition debt for 2013 was $150,000 ($1,800,000 ÷ 12). Tax amend form Example 2. Tax amend form The facts are the same as in Example 1. Tax amend form In 2014, Sharon's January through October principal payments on her second mortgage are applied to the home equity debt, reducing it to zero. Tax amend form The balance of the home acquisition debt remains $180,000 for each of those months. Tax amend form 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). Tax amend form The monthly balances total $2,157,000 [($180,000 × 10) + $179,000 + $178,000]. Tax amend form Therefore, the average balance of the home acquisition debt for 2014 is $179,750 ($2,157,000 ÷ 12). Tax amend form L
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Page Last Reviewed or Updated: 04-Mar-2014

The Tax Amend Form

Tax amend form Internal Revenue Bulletin:  2011-12  March 21, 2011  Rev. Tax amend form Proc. Tax amend form 2011-21 Table of Contents SECTION 1. Tax amend form PURPOSE SECTION 2. Tax amend form BACKGROUND SECTION 3. Tax amend form SCOPE SECTION 4. Tax amend form APPLICATION SECTION 5. Tax amend form EFFECTIVE DATE SECTION 6. Tax amend form EFFECT ON OTHER DOCUMENTS SECTION 7. Tax amend form DRAFTING INFORMATION SECTION 1. Tax amend form PURPOSE This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2011, including separate tables of limitations on depreciation deductions for trucks and vans; (2) the amounts that must be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2011, including a separate table of inclusion amounts for lessees of trucks and vans; and (3) revised tables of depreciation limitations and lessee inclusion amounts for passenger automobiles that were first placed in service or first leased by the taxpayer, respectively, during 2010 and to which the 50 percent additional first year depreciation deduction under § 168(k)(1)(A) of the Internal Revenue Code or the 100 percent additional first year depreciation deduction under § 168(k)(5) applies. Tax amend form The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7). Tax amend form SECTION 2. Tax amend form BACKGROUND . Tax amend form 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year. Tax amend form For passenger automobiles placed in service after 1988, § 280F(d)(7) requires the Internal Revenue Service to increase the amounts allowable as depreciation deductions by a price inflation adjustment amount. Tax amend form The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. Tax amend form This change reflects the higher rate of price inflation for trucks and vans since 1988. Tax amend form . Tax amend form 02 Section 2022(a) of the Small Business Jobs Act of 2010, Pub. Tax amend form L. Tax amend form No. Tax amend form 111-240, 124 Stat. Tax amend form 2504 (September 27, 2010), extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property (as defined in § 168(k)(2)) acquired by the taxpayer after December 31, 2007, and before January 1, 2011, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2011. Tax amend form Section 401(a) of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Pub. Tax amend form L. Tax amend form No. Tax amend form 111-312, 124 Stat. Tax amend form 3296 (Dec. Tax amend form 17, 2010) (the “Act”) further extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property acquired by the taxpayer after December 31, 2007, and before January 1, 2013, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2013. Tax amend form Section 401(b) of the Act further amended § 168(k) by adding § 168(k)(5). Tax amend form It allows a 100 percent additional first year depreciation deduction for qualified property acquired by a taxpayer after September 8, 2010, and before January 1, 2012, if the taxpayer places the property in service generally before January 1, 2012. Tax amend form Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A)(i) by $8,000 for passenger automobiles to which the additional first year depreciation deduction under § 168(k) (hereinafter, referred to as “§ 168(k) additional first year depreciation deduction”) applies. Tax amend form . Tax amend form 03 Section 168(k)(2)(D)(i) provides that the § 168(k) additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of § 168(g), including property described in § 280F(b)(1). Tax amend form Section 168(k)(2)(D)(iii) permits a taxpayer to elect out of the § 168(k) additional first year depreciation deduction for any class of property. Tax amend form Section 168(k)(4), as amended by the Act, permits a corporation to elect to increase the alternative minimum tax (“AMT”) credit limitation under § 53(c), instead of claiming the § 168(k) additional first year depreciation deduction for all eligible qualified property placed in service after December 31, 2010, that is round 2 extension property (as defined in § 168(k)(4)(I)(iv). Tax amend form Accordingly, this revenue procedure provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction applies. Tax amend form This revenue procedure also provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction does not apply, either because taxpayer (1) purchased the passenger automobile used; (2) did not use the passenger automobile during 2011 more than 50 percent for business purposes; (3) elected out of the § 168(k) additional first year depreciation deduction pursuant to § 168(k)(2)(D)(iii); or (4) elected to increase the § 53 AMT credit limitation in lieu of claiming § 168(k) additional first year depreciation. Tax amend form . Tax amend form 04 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. Tax amend form The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Tax amend form Under § 1. Tax amend form 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an amount determined by applying a formula to the amount obtained from a table. Tax amend form One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. Tax amend form Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. Tax amend form SECTION 3. Tax amend form SCOPE . Tax amend form 01 The limitations on depreciation deductions in section 4. Tax amend form 01(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2011, and continue to apply for each taxable year that the passenger automobile remains in service. Tax amend form . Tax amend form 02 The tables in section 4. Tax amend form 02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2011. Tax amend form Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. Tax amend form See Rev. Tax amend form Proc. Tax amend form 2006-18, 2006-1 C. Tax amend form B. Tax amend form 645, for passenger automobiles first leased during calendar year 2006; Rev. Tax amend form Proc. Tax amend form 2007-30, 2007-1 C. Tax amend form B. Tax amend form 1104, for passenger automobiles first leased during calendar year 2007; Rev. Tax amend form Proc. Tax amend form 2008-22, 2008-1 C. Tax amend form B. Tax amend form 658, for passenger automobiles first leased during calendar year 2008; Rev. Tax amend form Proc. Tax amend form 2009-24, 2009-1 C. Tax amend form B. Tax amend form 885, for passenger automobiles first leased during calendar year 2009; and Rev. Tax amend form Proc. Tax amend form 2010-18, 2010-1 C. Tax amend form B. Tax amend form 427, as amplified and modified by section 4. Tax amend form 03 of this revenue procedure, for passenger automobiles first leased during calendar year 2010. Tax amend form SECTION 4. Tax amend form APPLICATION . Tax amend form 01 Limitations on Depreciation Deductions for Certain Automobiles. Tax amend form (1) Amount of the inflation adjustment. Tax amend form (a) Passenger automobiles (other than trucks or vans). Tax amend form Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. Tax amend form Section 280F(d)(7)(B)(ii) defines the term “CPI automobile component” as the automobile component of the Consumer Price Index for all Urban Consumers published by the Department of Labor. Tax amend form The new car component of the CPI was 115. Tax amend form 2 for October 1987 and 137. Tax amend form 880 for October 2010. Tax amend form The October 2010 index exceeded the October 1987 index by 22. Tax amend form 680. Tax amend form Therefore, the automobile price inflation adjustment for 2011 for passenger automobiles (other than trucks and vans) is 19. Tax amend form 69 percent (22. Tax amend form 680/115. Tax amend form 2 x 100%). Tax amend form The dollar limitations in § 280F(a) are multiplied by a factor of 0. Tax amend form 1969, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2011. Tax amend form This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2011. Tax amend form (b) Trucks and vans. Tax amend form To determine the dollar limitations for trucks and vans first placed in service during calendar year 2011, the Service uses the new truck component of the CPI instead of the new car component. Tax amend form The new truck component of the CPI was 112. Tax amend form 4 for October 1987 and 142. Tax amend form 556 for October 2010. Tax amend form The October 2010 index exceeded the October 1987 index by 30. Tax amend form 156. Tax amend form Therefore, the automobile price inflation adjustment for 2011 for trucks and vans is 26. Tax amend form 83 percent (30. Tax amend form 156/112. Tax amend form 4 x 100%). Tax amend form The dollar limitations in § 280F(a) are multiplied by a factor of 0. Tax amend form 2683, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for trucks and vans. Tax amend form This adjustment applies to all trucks and vans that are first placed in service in calendar year 2011. Tax amend form (2) Amount of the limitation. Tax amend form Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2011. Tax amend form Use Table 1 for a passenger automobile (other than a truck or van), and Table 2 for a truck or van, placed in service in calendar year 2011 for which the § 168(k) additional first year depreciation deduction applies. Tax amend form Use Table 3 for a passenger automobile (other than a truck or van), and Table 4 for a truck or van, placed in service in calendar year 2011 for which the § 168(k) additional first year depreciation deduction does not apply. Tax amend form The Service intends to issue additional guidance addressing the interaction between the 100 percent additional first year depreciation deduction and § 280F(a) for the taxable years subsequent to the first taxable year. Tax amend form REV. Tax amend form PROC. Tax amend form 2011-21 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. Tax amend form PROC. Tax amend form 2011-21 TABLE 2 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,260 2nd Tax Year $5,200 3rd Tax Year $3,150 Each Succeeding Year $1,875 REV. Tax amend form PROC. Tax amend form 2011-21 TABLE 3 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. Tax amend form PROC. Tax amend form 2011-21 TABLE 4 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,260 2nd Tax Year $5,200 3rd Tax Year $3,150 Each Succeeding Year $1,875 . Tax amend form 02 Inclusions in Income of Lessees of Passenger Automobiles. Tax amend form A taxpayer must follow the procedures in § 1. Tax amend form 280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2011. Tax amend form In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure, while lessees of trucks and vans should use Table 6 of this revenue procedure. Tax amend form REV. Tax amend form PROC. Tax amend form 2011-21 TABLE 5 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2011 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $18,500 $19,000 3 8 11 13 16 19,000 19,500 4 9 13 15 18 19,500 20,000 4 10 15 17 20 20,000 20,500 5 11 16 19 23 20,500 21,000 5 12 18 21 25 21,000 21,500 6 13 19 24 26 21,500 22,000 6 14 21 26 29 22,000 23,000 7 16 23 29 32 23,000 24,000 8 18 27 32 37 24,000 25,000 9 20 30 36 42 25,000 26,000 10 23 33 40 46 26,000 27,000 11 25 36 44 51 27,000 28,000 12 27 40 48 55 28,000 29,000 13 29 43 52 60 29,000 30,000 14 31 47 55 65 30,000 31,000 15 34 49 60 69 31,000 32,000 16 36 53 63 73 32,000 33,000 17 38 56 68 77 33,000 34,000 18 40 60 71 82 34,000 35,000 19 42 63 75 87 35,000 36,000 20 45 66 79 91 36,000 37,000 21 47 69 83 96 37,000 38,000 22 49 73 87 100 38,000 39,000 23 51 76 91 105 39,000 40,000 24 53 80 94 110 40,000 41,000 25 56 82 99 114 41,000 42,000 26 58 86 102 119 42,000 43,000 27 60 89 107 123 43,000 44,000 28 62 93 110 128 44,000 45,000 29 64 96 114 133 45,000 46,000 30 67 98 119 137 46,000 47,000 31 69 102 122 141 47,000 48,000 32 71 105 127 145 48,000 49,000 33 73 109 130 150 49,000 50,000 34 76 111 134 155 50,000 51,000 35 78 115 138 159 51,000 52,000 36 80 118 142 164 52,000 53,000 37 82 122 146 168 53,000 54,000 38 84 125 150 173 54,000 55,000 39 87 128 153 178 55,000 56,000 40 89 131 158 182 56,000 57,000 41 91 135 161 187 57,000 58,000 42 93 138 166 191 58,000 59,000 43 95 142 169 196 59,000 60,000 44 98 144 174 200 60,000 62,000 46 101 149 179 207 62,000 64,000 48 105 156 187 216 64,000 66,000 50 109 163 195 225 66,000 68,000 52 114 169 203 234 68,000 70,000 54 118 176 211 243 70,000 72,000 56 123 182 218 253 72,000 74,000 58 127 189 226 262 74,000 76,000 60 132 195 234 270 76,000 78,000 62 136 202 242 279 78,000 80,000 64 140 209 250 288 80,000 85,000 67 148 220 264 304 85,000 90,000 72 159 237 283 327 90,000 95,000 77 170 253 303 350 95,000 100,000 82 181 269 323 372 100,000 110,000 90 198 293 352 406 110,000 120,000 100 220 326 391 452 120,000 130,000 110 242 359 430 497 130,000 140,000 120 264 392 469 543 140,000 150,000 130 286 424 509 588 150,000 160,000 140 308 457 548 633 160,000 170,000 150 330 490 587 679 170,000 180,000 160 352 523 626 724 180,000 190,000 170 374 555 666 769 190,000 200,000 180 396 588 705 815 200,000 210,000 190 418 621 744 860 210,000 220,000 200 440 654 784 904 220,000 230,000 210 462 687 823 950 230,000 240,000 220 484 719 863 995 240,000 And up 230 506 752 902 1,040 REV. Tax amend form PROC. Tax amend form 2011-21 TABLE 6 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2011 Fair Market Value of Truck or Van Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $19,000 $19,500 3 7 9 12 13 19,500 20,000 3 8 11 14 15 20,000 20,500 4 9 13 15 18 20,500 21,000 4 10 15 17 20 21,000 21,500 5 11 16 20 22 21,500 22,000 5 12 18 22 24 22,000 23,000 6 14 20 24 29 23,000 24,000 7 16 24 28 32 24,000 25,000 8 18 27 32 37 25,000 26,000 9 20 31 36 41 26,000 27,000 10 23 33 40 46 27,000 28,000 11 25 37 43 51 28,000 29,000 12 27 40 48 55 29,000 30,000 13 29 43 52 60 30,000 31,000 14 31 47 56 64 31,000 32,000 15 34 49 60 69 32,000 33,000 16 36 53 63 74 33,000 34,000 17 38 56 68 78 34,000 35,000 18 40 60 71 83 35,000 36,000 19 43 62 76 87 36,000 37,000 20 45 66 79 92 37,000 38,000 21 47 69 83 97 38,000 39,000 22 49 73 87 101 39,000 40,000 23 51 76 91 105 40,000 41,000 24 54 79 95 109 41,000 42,000 25 56 82 99 114 42,000 43,000 26 58 86 103 118 43,000 44,000 27 60 89 107 123 44,000 45,000 28 62 93 110 128 45,000 46,000 29 65 95 115 132 46,000 47,000 30 67 99 118 137 47,000 48,000 31 69 102 123 141 48,000 49,000 32 71 106 126 146 49,000 50,000 33 73 109 130 151 50,000 51,000 34 76 112 134 155 51,000 52,000 35 78 115 138 160 52,000 53,000 36 80 118 143 164 53,000 54,000 37 82 122 146 169 54,000 55,000 38 84 125 150 173 55,000 56,000 39 87 128 154 177 56,000 57,000 40 89 131 158 182 57,000 58,000 41 91 135 162 186 58,000 59,000 42 93 138 166 191 59,000 60,000 43 95 142 169 196 60,000 62,000 45 99 146 175 203 62,000 64,000 47 103 153 183 212 64,000 66,000 49 107 160 191 221 66,000 68,000 51 112 166 199 229 68,000 70,000 53 116 173 206 239 70,000 72,000 55 121 179 214 248 72,000 74,000 57 125 186 222 257 74,000 76,000 59 129 192 231 266 76,000 78,000 61 134 198 239 275 78,000 80,000 63 138 205 246 285 80,000 85,000 66 146 217 260 300 85,000 90,000 71 157 233 280 322 90,000 95,000 76 168 250 299 345 95,000 100,000 81 179 266 319 368 100,000 110,000 89 196 290 348 402 110,000 120,000 99 218 323 387 447 120,000 130,000 109 240 355 427 493 130,000 140,000 119 262 388 466 538 140,000 150,000 129 284 421 505 583 150,000 160,000 139 306 454 544 629 160,000 170,000 149 328 487 583 674 170,000 180,000 159 350 519 623 719 180,000 190,000 169 372 552 662 765 190,000 200,000 179 394 585 701 810 200,000 210,000 189 416 618 740 856 210,000 220,000 199 438 651 779 901 220,000 230,000 209 460 683 819 946 230,000 240,000 219 482 716 858 992 240,000 And up 229 504 749 897 1,037 . Tax amend form 03 Revised Amounts for Passenger Automobiles Placed in Service During 2010. Tax amend form (1) Calculation of the Revised Amount. Tax amend form The revised depreciation limits provided in this section 4. Tax amend form 03 were calculated by increasing the existing limitations on the first year allowance in Rev. Tax amend form Proc. Tax amend form 2010-18 by $8,000 as provided in § 168(k)(2)(F)(i). Tax amend form (2) Amount of the Revised Limitation. Tax amend form For passenger automobiles (that are not trucks or vans) placed in service by the taxpayer in calendar year 2010 for which the § 168(k) additional first year depreciation deduction applies, Table 7 of this revenue procedure contains the revised dollar amount of the depreciation limitations for each taxable year. Tax amend form For trucks or vans placed in service by the taxpayer in calendar year 2010 for which the § 168(k) additional first year depreciation deduction applies, Table 8 of this revenue procedure contains the revised dollar amount of the depreciation limitations for each taxable year. Tax amend form If the § 168(k) additional first year depreciation deduction does not apply to a passenger automobile placed in service by the taxpayer in calendar year 2010, the depreciation limitations for each taxable year in Tables 1 and 2 of Rev. Tax amend form Proc. Tax amend form 2010-18 apply. Tax amend form REV. Tax amend form PROC. Tax amend form 2011-21 TABLE 7 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2010 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. Tax amend form PROC. Tax amend form 2011-21 TABLE 8 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2010 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 (3) Modification to lease inclusion amounts for 2010. Tax amend form The lease inclusion amounts in Tables 3 and 4 of Rev. Tax amend form Proc. Tax amend form 2010-18 are modified by striking the first four lines of the inclusion amounts in each table. Tax amend form Consequently, Table 3 of Rev. Tax amend form Proc. Tax amend form 2010-18 applies to passenger automobiles (other than trucks and vans) that are first leased by the taxpayer in calendar year 2010 with a fair market value over $18,500, and Table 4 of Rev. Tax amend form Proc. Tax amend form 2010-18 applies to trucks and vans that are first leased by the taxpayer in calendar year 2010 with a fair market value over $19,000. Tax amend form SECTION 5. Tax amend form EFFECTIVE DATE This revenue procedure, with the exception of section 4. Tax amend form 03, applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2011. Tax amend form Section 4. Tax amend form 03 of this revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2010. Tax amend form SECTION 6. Tax amend form EFFECT ON OTHER DOCUMENTS Rev. Tax amend form Proc. Tax amend form 2010-18 is amplified and modified. Tax amend form SECTION 7. Tax amend form DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. Tax amend form Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). Tax amend form For further information regarding this revenue procedure, contact Mr. Tax amend form Harvey at (202) 622-4930 (not a toll-free call). 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