Can I deduct deferred mortgage interest?


A

albion01

Since may of 2005 I have had a minimum payment mortgage on
my house. I have incurred, this year alone, $3700 in
deferred interest which was added to the principal of my
loan each month. I was wondering if I can declare that
deferred interest as a deduction on my 2006 US income taxes.
I was also wondering if I could also deduct the deferred
interest from the previous year since I didn't use on my
previous years tax form.

Thanks in advance.
 
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A

A.G. Kalman

Since may of 2005 I have had a minimum payment mortgage on
my house. I have incurred, this year alone, $3700 in
deferred interest which was added to the principal of my
loan each month. I was wondering if I can declare that
deferred interest as a deduction on my 2006 US income taxes.
I was also wondering if I could also deduct the deferred
interest from the previous year since I didn't use on my
previous years tax form.
Deferred interest is not interest you paid. You can only
deduct the interest you paid.
 
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H

Harlan Lunsford

Since may of 2005 I have had a minimum payment mortgage on
my house. I have incurred, this year alone, $3700 in
deferred interest which was added to the principal of my
loan each month. I was wondering if I can declare that
deferred interest as a deduction on my 2006 US income taxes.
I was also wondering if I could also deduct the deferred
interest from the previous year since I didn't use on my
previous years tax form.
Did "they", meaning mortgagee, send you a form 1098 for 2005?
Probably not. Will you get one this year? Probably not.

So call them and ask why not.

ChEAr$,
Harlan Lunsford, EA n LA
 
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S

Stuart A. Bronstein

A.G. Kalman said:
(e-mail address removed) wrote:
Deferred interest is not interest you paid. You can only
deduct the interest you paid.
If he borrowed money on his credit card and paid with that,
he'd get the deduction. How is this different?

Stu
 
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L

L K Williams

Stuart A. Bronstein"
If he borrowed money on his credit card and paid with that,
he'd get the deduction. How is this different?
How would he claim the deduction? The credit card company
does not have the necessary perfected lien against the
property. Or has the law been changed so that we can claim
such things as credit card and auto loan interest again?

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans
 
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B

Bill Brown

Stuart A. Bronstein said:
If he borrowed money on his credit card and paid with that,
he'd get the deduction. How is this different?
It is different in that he did not borrow money on his
credit card. Analogies almost never work when resolving tax
issues.
 
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A

A.G. Kalman

If he borrowed money on his credit card and paid with that,
he'd get the deduction. How is this different?
It's a minimum payment mortgage. Each monthly payment is
less than the actual interest owed. The unpaid interest is
added to principal. A cash basis taxpayer can not deduct
interest unless the taxpayer actually pays the interest. In
this case, the debt is growing each month.
 
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S

Seth Breidbart

If he borrowed money on his credit card and paid with that,
he'd get the deduction. How is this different?
The credit card would have to be through a different bank.

Interest paid on the credit card loan wouldn't be
deductible.

Seth
 
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S

Stuart A. Bronstein

How would he claim the deduction? The credit card company
does not have the necessary perfected lien against the
property. Or has the law been changed so that we can claim
such things as credit card and auto loan interest again?
You're right, I was thinking about the old days. Or the
credit card is really a separate line of credit secured by a
mortgage in the house.

In the normal case spending borrowed money is deductible if
the payment would otherwise be deductible with unborrowed
money. So why is this situation any different?

Stu
 
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S

Seth Breidbart

How would he claim the deduction?
He borrowed on his credit card and paid that as mortgage
interest. The mortgage interest is deductible. Interest on
the credit card loan isn't. (I've done that, because the
credit card loan was at 0%, so I let my money earn
interest.)

Seth
 
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