Who qualifies for the deduction
A special method to compute deductions for mortgage interest and real estate taxes on a main home may be used if the following two conditions apply:
- Homeowners received assistance from the following federal or state housing programs:
- State Housing Finance Agency (HFA) Hardest Hit program in which program payments could be used to pay mortgage interest
- An Emergency Homeowners' Loan program administered by the Department of Housing and Urban Development (HUD) or a state
- Homeowners meet the rules to deduct:
- All of the mortgage interest on their loan
- All of the real estate taxes on their main home
Amounts you can deduct
If these tests are met, then all mortgage payments made during the year to a mortgage servicer, the state HFA, or HUD may be deducted. This includes the amount shown in box 3 of Form 1098-MA, Mortgage Assistance Payments.
The total paid, however, may not exceed the sum of the following amounts:
- Amount shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received)
- Amount shown in box 4 (mortgage insurance premiums and real property taxes)
- Amount shown in box 5 (real property taxes)
This special method to compute deductions for mortgage interest and real estate taxes on a main home isn't required.
