• Mortgage interest is deductible for most Americans on their federal income taxes.TAX TIME image by brelsbil from Fotolia.com
  
  Home mortgage interest is one of the few interest deductions available for taxpayers in 2010. There are rules regarding when mortgage interest is deductible. Publications by the Internal Revenue Service explain the rules and regulations, but taxpayers with questions should consult a tax preparation professional. Taxpayers claim mortgage interest deductions on Schedule A of Form 1040.
  
  

Definitions

• Home mortgage interest is defined by the IRS as interest paid on a loan secured by the taxpayer's principal or second home. It can be the original loan used to purchase or build the property, a line of credit backed by the home, a second mortgage, a refinancing loan or a home equity loan. Mortgages taken before Oct. 13, 1987, are fully deductible, as is mortgage debt used to acquire a home if the total mortgage debts total less than $1 million, or if the home equity debt originated after Oct. 13, 1987, totals less than $100,000. Mortgages not fitting these qualifications may be partially deductible.
  
  

Who May Claim

• Most taxpayers qualify for the mortgage deduction, but there are a few requirements. The taxpayer must file Form 1040, the common individual tax form, and itemize deductions on Schedule A. The taxpayer must be legally bound to repay the loan and have a debtor-creditor relationship with the mortgage holder. The mortgage must secure a home in which the taxpayer holds an ownership interest. For example, a mortgage taken out by a parent to finance a home that her child owns would not qualify for the mortgage deduction.
  
  

General Rules

• The mortgage interest deduction must be claimed for the tax year in which the interest is paid. The same applies to points paid during the loan origination process. Points are a percentage of the total mortgage paid up front during the purchase process. For points to be considered deductible they must be a common practice for the lending industry at the time of the purchase and not more than the standard points paid in the area. Points paid in lieu of appraisals or other costs associated with the purchase of a home are not deductible.