Tax benefits to homeowners.
Homeowners benefit from several generous tax advantages.
The most important benefit is the mortgage interest deduction. The IRS calls such loans acquisition debt. Points paid by the buyer or seller on a new mortgage loan for the purchase or improvement of a principal residence are deductible for the year in which the home was purchased. Any points paid on a refinance mortgage, a loan to purchase a second home or a mortgage on income property must be spread over the life of the loan. Note that when obtaining a new mortgage, the borrower usually is asked to pay interest from the closing date until the first of the next month.