2021 Publication 530

Contents

Reminders ................... 1

Introduction .................. 2

What You Can and Can’t Deduct ..... 2

State and Local Real Estate

Taxes ................. 3

Sales Taxes ................ 4

Home Mortgage Interest ......... 4

Mortgage Interest Credit .......... 9

Figuring the Credit ........... 10

Basis ..................... 11

Figuring Your Basis .......... 11

Adjusted Basis ............. 13

Keeping Records .............. 13

How To Get Tax Help ........... 14

Index ..................... 18

Reminders

Future developments. For the latest informa-

tion about developments related to Pub. 530,

such as legislation enacted after it was pub-

lished, go to IRS.gov/Pub530.

Home Affordable Modification Program

(HAMP). If you benefit from Pay-for-Perform-

ance Success Payments, the payments aren’t

taxable under HAMP.

Repayment of first-time homebuyer credit.

Generally, you must repay any credit you

claimed for a home you bought if you bought

the home in 2008. See Form 5405 and its in-

structions for details and for exceptions to the

repayment rule.

Home equity loan interest. No matter when

the indebtedness was incurred, you can no lon-

ger deduct the interest from a loan secured by

your home to the extent the loan proceeds

weren't used to buy, build, or substantially im-

prove your home.

Modified and amplified safe harbor method

for participants in the Hardest Hit Fund and

Emergency Homeowners' Loan Programs.

If you are a homeowner who received assis-

tance under a State Housing Finance Agency

Hardest Hit Fund program or an Emergency

Homeowners' Loan Program, you may be able

to deduct all of the payments you made on your

mortgage during the year. Notice 2018-63 ex-

tends and preserves application of the Hardest

Hit Fund safe harbor to homeowners who may

be affected by the limitation on the deduction

for state and local taxes. For details, see Hard-

est Hit Fund and Emergency Homeowners'

Loan Programs under What You Can and Can't

Deduct, later, and Notice 2018-63 for additional

guidance. Notice 2018-63 is available at

IRS.gov/IRB/2018-34_IRB#NOT-2018-63.

Homeowners Assistance Fund. The Home-

owners Assistance Fund program (HAF) was

established to provide financial assistance to el-

igible homeowners for purposes of paying

Department

of the

Treasury

Internal

Revenue

Service

Publication 530

Cat. No. 15058K

Tax

Information for

Homeowners

For use in preparing

2021 Returns

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certain expenses related to their principal resi-

dence to prevent mortgage delinquencies, de-

faults, foreclosures, loss of utilities or home en-

ergy services, and also displacements of

homeowners experiencing financial hardship

after January 21, 2020.

If you are a homeowner who received assis-

tance under the HAF, the payments from the

HAF program are not considered income to

you. However, you cannot take a deduction or

credit for expenditures paid from the HAF pro-

gram. Rev. Proc. 2021-47 provides a safe har-

bor method for certain homeowners to deter-

mine the amount you can deduct for home

mortgage interest, home mortgage insurance

premiums, and state and local real property

taxes if you paid the mortgage servicer with

your own funds but also received financial as-

sistance from the HAF program described in

Rev. Proc. 2021-47. For more details about the

HAF program, see Homeowner Assistance

Fund.

Extended tax benefits. Certain tax benefits,

including the following, that were set to expire

have been extended.

•

The itemized deduction for mortgage insur-

ance premiums has been extended

through 2021.

•

The credit for nonbusiness energy property

has been extended through 2021.

•

The exclusion from income of discharges

of qualified principal residence indebted-

ness has been extended through 2026.

Residential energy credits. You may be able

to take a credit if you made energy saving im-

provements to your home located in the United

States in 2021. See the Instructions for Form

5695, Residential Energy Credits, for more in-

formation.

Mortgage debt forgiveness. You can ex-

clude from gross income any discharges of

qualified principal residence indebtedness

made after 2006 and in most cases before

2026. You must reduce the basis of your princi-

pal residence (but not below zero) by the

amount you exclude. See Discharges of quali-

fied principal residence indebtedness, later,

and Form 982, Reduction of Tax Attributes Due

to Discharge of Indebtedness (and Section

1082 Basis Adjustment), for more information.

Photographs of missing children. The IRS is

a proud partner with the National Center for

Missing & Exploited Children® (NCMEC). Pho-

tographs of missing children selected by the

Center may appear in this publication on pages

that would otherwise be blank. You can help

bring these children home by looking at the

photographs and calling 1-800-THE-LOST

(1-800-843-5678) if you recognize a child.

Introduction

This publication provides tax information for

homeowners. Your home may be a house, con-

dominium, cooperative apartment, mobile

home, houseboat, or house trailer that contains

sleeping space and toilet and cooking facilities.

This publication explains how you treat

items such as settlement and closing costs, real

estate taxes, sales taxes, home mortgage inter-

est, and repairs.

The following topics are explained.

•

What you can and can’t deduct on your tax

return.

•

The tax credit you can claim if you re-

ceived a mortgage credit certificate when

you bought your home.

•

Why you should keep track of adjustments

to the basis of your home. (Your home's

basis is generally what it cost; adjustments

include the cost of any improvements you

might make.)

•

What records you should keep as proof of

the basis and adjusted basis.

Comments and suggestions. We welcome

your comments about this publication and sug-

gestions for future editions.

You can send us comments through

IRS.gov/FormComments. Or, you can write to

the Internal Revenue Service, Tax Forms and

Publications, 1111 Constitution Ave. NW,

IR-6526, Washington, DC 20224.

Although we can’t respond individually to

each comment received, we do appreciate your

feedback and will consider your comments and

suggestions as we revise our tax forms, instruc-

tions, and publications. Don’t send tax ques-

tions, tax returns, or payments to the above ad-

dress.

Getting answers to your tax questions.

If you have a tax question not answered by this

publication or the How To Get Tax Help section

at the end of this publication, go to the IRS In-

teractive Tax Assistant page at IRS.gov/

Help/ITA where you can find topics by using the

search feature or viewing the categories listed.

Getting tax forms, instructions, and pub-

lications. Go to IRS.gov/Forms to download

current and prior-year forms, instructions, and

publications.

Ordering tax forms, instructions, and

publications. Go to IRS.gov/OrderForms to

order current forms, instructions, and publica-

tions; call 800-829-3676 to order prior-year

forms and instructions. The IRS will process

your order for forms and publications as soon

as possible. Don’t resubmit requests you’ve al-

ready sent us. You can get forms and publica-

tions faster online.

Useful Items

You may want to see:

Publication

4681 Canceled Debts, Foreclosures,

Repossessions, and Abandonments

523 Selling Your Home

525 Taxable and Nontaxable Income

527 Residential Rental Property

547 Casualties, Disasters, and Thefts

551 Basis of Assets

555 Community Property

587 Business Use of Your Home

936 Home Mortgage Interest Deduction

4681

523

525

527

547

551

555

587

936

Form (and Instructions)

Schedule A (Form 1040) Itemized

Deductions

5405 Repayment of the First-Time

Homebuyer Credit

5695 Residential Energy Credits

8396 Mortgage Interest Credit

982 Reduction of Tax Attributes Due to

Discharge of Indebtedness (and

Section 1082 Basis Adjustment)

See How To Get Tax Help, near the end of this

publication, for information about getting publi-

cations and forms.

What You Can and Can’t

Deduct

To deduct expenses of owning a home, you

must file Form 1040, U.S. Individual Income

Tax Return, or Form 1040-SR, U.S. Income Tax

Return for Seniors, and itemize your deductions

on Schedule A (Form 1040). If you itemize, you

can’t take the standard deduction.

This section explains what expenses you

can deduct as a homeowner. It also points out

expenses that you can’t deduct. There are four

primary discussions: state and local real estate

taxes, sales taxes, home mortgage interest,

and mortgage insurance premiums.

Generally, your real estate taxes and home

mortgage interest are included in your house

payment.

Your house payment. If you took out a mort-

gage (loan) to finance the purchase of your

home, you probably have to make monthly

house payments. Your house payment may in-

clude several costs of owning a home. The only

costs you can deduct are state and local real

estate taxes actually paid to the taxing authority

and interest that qualifies as home mortgage in-

terest, and mortgage insurance premiums.

These are discussed in more detail later.

Some nondeductible expenses that may be

included in your house payment include:

•

Fire or homeowner's insurance premiums,

and

•

The amount applied to reduce the principal

of the mortgage.

Minister's or military housing allowance. If

you are a minister or a member of the uni-

formed services and receive a housing allow-

ance that isn’t taxable, you can still deduct your

real estate taxes and your home mortgage in-

terest. You don’t have to reduce your deduc-

tions by your nontaxable allowance. For more

information, see Pub. 517, Social Security and

Other Information for Members of the Clergy

and Religious Workers, and Pub. 3, Armed

Forces' Tax Guide.

Nondeductible payments. You can’t deduct

any of the following items.

•

Insurance (other than mortgage insurance

premiums), including fire and comprehen-

sive coverage, and title insurance.

•

Wages you pay for domestic help.

Schedule A (Form 1040)

5405

5695

8396

982

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Page 2 Publication 530 (2021)

•

Depreciation.

•

The cost of utilities, such as gas, electric-

ity, or water.

•

Most settlement costs. See Settlement or

closing costs under Cost as Basis, later,

for more information.

•

Forfeited deposits, down payments, or ear-

nest money.

•

Internet or wifi system or service.

•

Homeowners association fees, condomin-

ium association fees, or common charges.

•

Repairs to home.

Hardest Hit Fund and

Emergency Homeowners'

Loan Programs

You can use a special method to figure your de-

duction for mortgage interest and real estate

taxes on your main home if you meet the follow-

ing two conditions.

1. If you received assistance under:

a. A State Housing Finance Agency

(State HFA) Hardest Hit Fund pro-

gram in which program payments

could be used to pay mortgage inter-

est, or

b. An Emergency Homeowners' Loan

Program (EHLP) administered by the

Department of Housing and Urban

Development (HUD) or a state.

2. 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,

then you can use a special method to fig-

ure your deduction for mortgage interest

and real estate taxes on your main home.

If you meet these conditions, 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 (in-

cluding the amount shown in box 3 of Form

1098-MA, Mortgage Assistance Payments), but

not more than the sum of the amounts shown in

box 1 (mortgage interest received), box 5 (mort-

gage insurance premiums), and box 10 (real

property taxes) of Form 1098, Mortgage Inter-

est Statement.

You may first allocate amounts paid to mort-

gage interest up to the amount shown on Form

1098. You may then use any reasonable

method to allocate the remaining balance of the

payments to real property taxes. Regardless of

how you determine the deductible amount un-

der this special safe harbor method, any

amount allocated to state or local property

taxes is subject to the limitation on the deduc-

tion for state and local taxes. However, you

aren’t required to use this special method to fig-

ure your deduction for mortgage interest and

real estate taxes on your main home.

For additional guidance, see Notice

2018-63, available at IRS.gov/irb/

2018-34_IRB#NOT-2018-63.

CAUTION

Homeowners Assistance

Fund

There is an optional method for determining

your mortgage interest and state and local real

property tax deduction if you received assis-

tance from a State or an entity of a State that

was funded from amounts from the Homeown-

ers Assistance Fund program in which a portion

of the program payments is used to pay mort-

gage interest, mortgage insurance premiums or

State and local real property taxes on your main

home, and you meet the following two require-

ments:

1. You paid the remaining portion of the

mortgage interest, mortgage insurance

premiums, or State and local real property

taxes from your own sources (that is out of

pocket payments not subsidized by any

governmental financial assistance pro-

grams), and

2. You meet the rules to deduct all of the

mortgage interest and mortgage insurance

premiums on your loan and all of the real

estate taxes on your main home, then

there is an optional method to figure your

itemized deduction for mortgage interest,

mortgage insurance premiums, and State

and local real estate taxes on your main

home.

The optional method allows you to deduct the

mortgage interest, mortgage insurance premi-

ums, and State and local real property taxes re-

ported on Form 1098, but only up to the amount

you paid from your own sources to the mort-

gage servicer during the tax year. You are not

required to use this optional method to figure

your deduction for mortgage interest, mortgage

insurance premiums, and State and local real

property taxes on your main home.

See sections on State and Local Real

Estate Taxes, Mortgage Interest, and

Mortgage Insurance Premiums in this

publication to determine whether you meet the

rules to deduct all of the mortgage interest and

mortgage insurance premiums on your loan and

all of the real estate taxes on your main home.

State and Local Real Estate

Taxes

Most state and local governments charge an

annual tax on the value of real property. This is

called a real estate tax. You can deduct the tax

if it is assessed uniformly at a like rate on all real

property throughout the community. The pro-

ceeds must be for general community or gov-

ernmental purposes and not be a payment for a

special privilege granted or special service ren-

dered to you.

The deduction for state and local taxes,

including real estate taxes, is limited to

$10,000 ($5,000 if married filing sepa-

rately). See the Instructions for Schedule A

(Form 1040) for more information.

CAUTION

Deductible Real Estate Taxes

You can deduct real estate taxes imposed on

you. You must have paid them either at settle-

ment or closing, or to a taxing authority (either

directly or through an escrow account) during

the year. If you own a cooperative apartment,

see Special Rules for Cooperatives, later.

Where to deduct real estate taxes. Enter the

amount of your deductible state and local real

estate taxes on Schedule A (Form 1040),

line 5b.

Real estate taxes paid at settlement or clos-

ing. Real estate taxes are generally divided so

that you and the seller each pay taxes for the

part of the property tax year you owned the

home. Your share of these taxes is fully deduc-

tible if you itemize your deductions.

Division of real estate taxes. For federal

income tax purposes, the seller is treated as

paying the property taxes up to, but not includ-

ing, the date of sale. You (the buyer) are treated

as paying the taxes beginning with the date of

sale. This applies regardless of the lien dates

under local law. Generally, this information is in-

cluded on the settlement statement you get at

closing.

You and the seller each are considered to

have paid your own share of the taxes, even if

one or the other paid the entire amount. You

each can deduct your own share, if you itemize

deductions, for the year the property is sold.

Example. You bought your home on Sep-

tember 1. The property tax year (the period to

which the tax relates) in your area is the calen-

dar year. The tax for the year was $730 and

was due and paid by the seller on August 15.

You owned your new home during the prop-

erty tax year for 122 days (September 1 to De-

cember 31, including your date of purchase).

You figure your deduction for real estate taxes

on your home as follows.

1. Enter the total real estate taxes

for the real property tax year ....

$730

2. Enter the number of days in the

property tax year that you owned

the property .................

122

3. Divide line 2 by 365 ........... 0.3342

4. Multiply line 1 by line 3. This is

your deduction. Enter it on

Schedule A (Form 1040),

line 5b ......................

$244

You can deduct $244 on your return for the

year if you itemize your deductions. You are

considered to have paid this amount and can

deduct it on your return even if, under the con-

tract, you didn’t have to reimburse the seller.

Delinquent taxes. Delinquent taxes are

unpaid taxes that were imposed on the seller for

an earlier tax year. If you agree to pay delin-

quent taxes when you buy your home, you can’t

deduct them. You treat them as part of the cost

of your home. See Real estate taxes, later, un-

der Basis.

Escrow accounts. Many monthly house pay-

ments include an amount placed in escrow (put

in the care of a third party) for real estate taxes.

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Publication 530 (2021) Page 3

You may not be able to deduct the total you pay

into the escrow account. You can deduct only

the real estate taxes that the lender actually

paid from escrow to the taxing authority. Your

real estate tax bill will show this amount.

Refund or rebate of real estate taxes. If you

receive a refund or rebate of real estate taxes

this year for amounts you paid this year, you

must reduce your real estate tax deduction by

the amount refunded to you. If the refund or re-

bate was for real estate taxes paid for a prior

year, you may have to include some or all of the

refund in your income. For more information,

see Recoveries in Pub. 525, Taxable and Non-

taxable Income.

Items You Can’t Deduct

as Real Estate Taxes

The following items aren’t deductible as real es-

tate taxes.

Charges for services. An itemized charge for

services to specific property or people isn’t a

tax, even if the charge is paid to the taxing au-

thority. You can’t deduct the charge as a real

estate tax if it is:

•

A unit fee for the delivery of a service (such

as a $5 fee charged for every 1,000 gal-

lons of water you use),

•

A periodic charge for a residential service

(such as a $20 per month or $240 annual

fee charged to each homeowner for trash

collection), or

•

A flat fee charged for a single service pro-

vided by your local government (such as a

$30 charge for mowing your lawn because

it had grown higher than permitted under a

local ordinance).

You must look at your real estate tax

bill to decide if any nondeductible item-

ized charges, such as those listed

above, are included in the bill. If your taxing au-

thority (or lender) doesn’t furnish you a copy of

your real estate tax bill, ask for it. Contact the

taxing authority if you need additional informa-

tion about a specific charge on your real estate

tax bill.

Assessments for local benefits. You can’t

deduct amounts you pay for local benefits that

tend to increase the value of your property. Lo-

cal benefits include the construction of streets,

sidewalks, or water and sewer systems. You

must add these amounts to the basis of your

property.

You can, however, deduct assessments (or

taxes) for local benefits if they are for mainte-

nance, repair, or interest charges related to

those benefits. An example is a charge to repair

an existing sidewalk and any interest included

in that charge.

If only a part of the assessment is for main-

tenance, repair, or interest charges, you must

be able to show the amount of that part to claim

the deduction. If you can’t show what part of the

assessment is for maintenance, repair, or inter-

est charges, you can’t deduct any of it.

An assessment for a local benefit may be

listed as an item in your real estate tax bill. If so,

use the rules in this section to find how much of

it, if any, you can deduct.

CAUTION

Transfer taxes (or stamp taxes). You can't

deduct transfer taxes and similar taxes and

charges on the sale of a personal home. If you

are the buyer and you pay them, include them

in the cost basis of the property. If you are the

seller and you pay them, they are expenses of

the sale and reduce the amount realized on the

sale.

Homeowners’ association assessments.

You can't deduct these assessments because

the homeowners’ association, rather than a

state or local government, imposes them.

Foreign taxes you paid on real estate. You

can't deduct foreign taxes you paid on real es-

tate.

Special Rules for Cooperatives

If you own a cooperative apartment, some spe-

cial rules apply to you, though you generally re-

ceive the same tax treatment as other home-

owners. As an owner of a cooperative

apartment, you own shares of stock in a corpo-

ration that owns or leases housing facilities.

You can deduct your share of the corporation's

deductible real estate taxes if the cooperative

housing corporation meets the following condi-

tions.

1. The corporation has only one class of

stock outstanding.

2. Each stockholder, solely because of own-

ership of the stock, can live in a house,

apartment, or house trailer owned or

leased by the corporation.

3. No stockholder can receive any distribu-

tion out of capital, except on a partial or

complete liquidation of the corporation.

4. At least one of the following.

a. At least 80% of the corporation's

gross income for the tax year was

paid by the tenant-stockholders. For

this purpose, gross income means all

income received during the entire tax

year, including any received before

the corporation changed to coopera-

tive ownership.

b. At least 80% of the total square foot-

age of the corporation's property must

be available for use by the ten-

ant-stockholders during the entire tax

year.

c. At least 90% or more of the expendi-

tures paid or incurred by the corpora-

tion were used for the acquisition,

construction, management, mainte-

nance, or care of the corporation’s

property for the benefit of the ten-

ant-shareholders during the entire tax

year.

Tenant-stockholders. A tenant-stockholder

can be any entity (such as a company or corpo-

ration, trust, estate, partnership, or association)

as well as an individual. The tenant-stockholder

doesn't have to live in any of the cooperative's

dwelling units. The units that the tenant-stock-

holder has the right to occupy can be rented to

others.

Deductible taxes. You figure your share of

real estate taxes in the following way.

1. Divide the number of your shares of stock

by the total number of shares outstanding,

including any shares held by the corpora-

tion.

2. Multiply the corporation's deductible real

estate taxes by the number you figured in

(1). This is your share of the real estate

taxes.

Generally, the corporation will tell you your

share of its real estate tax. This is the amount

you can deduct if it reasonably reflects the cost

of real estate taxes for your dwelling unit.

Refund of real estate taxes. If the corpo-

ration receives a refund of real estate taxes it

paid in an earlier year, it must reduce the

amount of real estate taxes paid this year when

it allocates the tax expense to you. Your deduc-

tion for real estate taxes the corporation paid

this year is reduced by your share of the refund

the corporation received.

Sales Taxes

Generally, you can elect to deduct state and lo-

cal general sales taxes instead of state and lo-

cal income taxes as an itemized deduction on

Schedule A (Form 1040). You must check the

box on Schedule A (Form 1040), line 5a, if you

elect this option. Deductible sales taxes may in-

clude sales taxes paid on your home (including

mobile and prefabricated), or home building

materials if the tax rate was the same as the

general sales tax rate. For information on figur-

ing your deduction, see the Instructions for

Schedule A (Form 1040).

The deduction for state and local taxes,

including general sales taxes, if elected

instead of income taxes, is limited to

$10,000 ($5,000 if married filing separately).

See the Instructions for Schedule A (Form

1040) for more information.

If you elect to deduct the sales taxes

paid on your home, or home building

materials, you can't include them as

part of your cost basis in the home.

Home Mortgage Interest

This section of the publication gives you basic

information about home mortgage interest, in-

cluding information on interest paid at settle-

ment, points, and Form 1098, Mortgage Interest

Statement.

Most home buyers take out a mortgage

(loan) to buy their home. They then make

monthly payments to either the mortgage holder

or someone collecting the payments for the

mortgage holder.

Usually, you can deduct the entire part of

your payment that is for mortgage interest if you

itemize your deductions on Schedule A (Form

1040). However, your deduction may be limited.

See Limits on home mortgage interest next for

more information.

CAUTION

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Page 4 Publication 530 (2021)

Limits on home mortgage interest. Your de-

duction for home mortgage interest is subject to

a number of limits. If one or more of the follow-

ing limits applies, see Pub. 936 to figure your

deduction. Also see Pub. 936 if you later refi-

nance your mortgage or buy a second home.

Limit for loan proceeds not used to buy,

build, or substantially improve your home.

You can only deduct home mortgage interest to

the extent that the loan proceeds from your

home mortgage are used to buy, build, or sub-

stantially improve the home securing the loan.

The only exception to this limit is for loans taken

out on or before October 13, 1987; the loan pro-

ceeds for these loans are treated as having

been used to buy, build, or substantially im-

prove the home. See Pub. 936 for more infor-

mation about loans taken out on or before Octo-

ber 13, 1987.

Limit on loans taken out on or before

December 15, 2017. For qualifying debt taken

out on or before December 15, 2017, you can

only deduct home mortgage interest on up to $1

million ($500,000 if you are married filing sepa-

rately) of that debt. The only exception is for

loans taken out on or before October 13, 1987;

see Pub. 936 for more information about loans

taken out on or before October 13, 1987.

See Pub. 936 to figure your deduction if you

have loans taken out on or before December

15, 2017, that exceed $1 million ($500,000 if

you are married filing separately).

Limit on loans taken out after December

15, 2017. For qualifying debt taken out after

December 15, 2017, you can only deduct home

mortgage interest on up to $750,000 ($375,000

if you are married filing separately) of that debt.

If you also have qualifying debt subject to the $1

million ($500,000 if you are married filing sepa-

rately) limitation discussed under Limit on loans

taken out on or before December 15, 2017, ear-

lier, the $750,000 limit for debt taken out after

December 15, 2017, is reduced by the amount

of your qualifying debt subject to the $1 million

limit. An exception exists for certain loans taken

out after December 15, 2017, but before April 1,

2018. If the exception applies, your loan may be

treated in the same manner as a loan taken out

on or before December 15, 2017. See Pub. 936

for more information about this exception.

See Pub. 936 to figure your deduction if you

have loans taken out after October 13, 1987

that exceed $750,000 ($375,000 or less if you

are married filing separately).

Limit when loans exceed the fair market

value of the home. If the total amount of all

mortgages is more than the fair market value of

the home, see Pub. 936 to figure your deduc-

tion.

Refund of home mortgage interest. If you

receive a refund of home mortgage interest that

you deducted in an earlier year and that re-

duced your tax, you must generally include the

refund in income in the year you receive it. For

more information, see Recoveries in Pub. 525.

The amount of the refund will usually be shown

on the mortgage interest statement you receive

from your mortgage lender. See Mortgage Inter-

est Statement, later.

Deductible Mortgage Interest

To be deductible, the interest you pay must be

on a loan secured by your main home or a sec-

ond home, regardless of how the loan is la-

beled. The loan can be a first or second mort-

gage, a home improvement loan, a home equity

loan, or a refinanced mortgage.

Interest paid on home mortgage pro-

ceeds is only deductible to the extent

the loan proceeds were used to buy,

build, or substantially improve your home.

Prepaid interest. If you pay interest in ad-

vance 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. Generally, you

can deduct in each year only the interest that

qualifies as home mortgage interest for that

year. An exception (discussed later) applies to

points.

Late payment charge on mortgage pay-

ment. You can deduct as home mortgage in-

terest a late payment charge if it wasn't for a

specific service in connection with your mort-

gage loan.

Mortgage prepayment penalty. If you pay off

your home mortgage early, you may have to

pay a penalty. You can deduct that penalty as

home mortgage interest, provided the penalty

isn't for a specific service performed or cost in-

curred in connection with your mortgage loan.

Ground rent. In some states (such as Mary-

land), you may buy your home subject to a

ground rent. A ground rent is an obligation you

assume to pay a fixed amount per year on the

property. Under this arrangement, you are leas-

ing (rather than buying) the land on which your

home is located.

Redeemable ground rents. If you make

annual or periodic rental payments on a re-

deemable ground rent, you can deduct the pay-

ments as mortgage interest. The ground rent is

a redeemable ground rent only if all of the fol-

lowing are true.

•

Your lease, including renewal periods, is

for more than 15 years.

•

You can freely assign the lease.

•

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 specified amount.

•

The lessor's interest in the land is primarily

a security interest to protect the rental pay-

ments to which he or she is entitled.

Payments made to end the lease and buy

the lessor's entire interest in the land aren't re-

deemable ground rents. You can't deduct them.

Nonredeemable ground rents. Payments

on a nonredeemable ground rent aren't mort-

gage interest. You can deduct them as rent only

if they are a business expense or if they are for

rental property.

Cooperative apartment. You can usually treat

the interest on a loan you took out to buy stock

in a cooperative housing corporation as home

mortgage interest if you own a cooperative

apartment, and the cooperative housing corpo-

CAUTION

ration meets the conditions described earlier

under Special Rules for Cooperatives. In addi-

tion, you can treat as home mortgage interest

your share of the corporation's deductible mort-

gage interest. Figure your share of mortgage in-

terest the same way that is shown for figuring

your share of real estate taxes in the Example

under Division of real estate taxes, earlier. For

more information on cooperatives, see Special

Rule for Tenant-Stockholders in Cooperative

Housing Corporations in Pub. 936.

Refund of cooperative's mortgage inter-

est. You must reduce your mortgage interest

deduction by your share of any cash portion of

a patronage dividend that the cooperative re-

ceives. The patronage dividend is a partial re-

fund to the cooperative housing corporation of

mortgage interest it paid in a prior year.

If you receive a Form 1098 from the cooper-

ative housing corporation, the form should show

only the amount you can deduct.

SBA disaster home loans. Interest paid on

disaster home loans from the Small Business

Administration (SBA) is deductible as mortgage

interest if the requirements discussed earlier

under Home Mortgage Interest are met.

Mortgage Interest Paid

at Settlement

One item that normally appears on a settlement

or closing statement is home mortgage interest.

You can deduct the interest that you pay at

settlement if you itemize your deductions on

Schedule A (Form 1040). This amount should

be included in the mortgage interest statement

provided by your lender. See the discussion un-

der Mortgage Interest Statement, later. Also, if

you pay interest in advance, see Prepaid inter-

est, earlier, and Points next.

Points

The term “points” is used to describe certain

charges paid, or treated as paid, by a borrower

to obtain a home mortgage. Points may also be

called loan origination fees, maximum loan

charges, loan discount, or discount points.

A borrower is treated as paying any points

that a home seller pays for the borrower's mort-

gage. See Points paid by the seller, later.

General rule. You can't deduct the full amount

of points in the year paid. They are prepaid in-

terest, so you must generally deduct them over

the life (term) of the mortgage.

Exception. You can deduct the full amount

of points in the year paid if you meet all the fol-

lowing tests.

1. Your loan is secured by your main home.

(Generally, your main home is the one you

live in most of the time.)

2. Paying points is an established business

practice in the area where the loan was

made.

3. The points paid weren't more than the

points generally charged in that area.

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Publication 530 (2021) Page 5

4. You use the cash method of accounting.

This means you report income in the year

you receive it and deduct expenses in the

year you pay them. Most individuals use

this method.

5. The points weren't paid in place of

amounts that ordinarily are stated sepa-

rately on the settlement statement, such

as appraisal fees, inspection fees, title

fees, attorney fees, and property taxes.

6. The funds you provided at or before clos-

ing, plus any points the seller paid, were at

least as much as the points charged. The

funds you provided aren't required to have

been applied to the points. They can in-

clude a down payment, an escrow de-

posit, earnest money, and other funds you

paid at or before closing for any purpose.

You can't have borrowed these funds.

7. You use your loan to buy or build your

main home.

8. The points were figured as a percentage

of the principal amount of the mortgage.

9. The amount is clearly shown on the settle-

ment statement (such as the Uniform Set-

tlement Statement, Form HUD-1) as

points charged for the mortgage. The

points may be shown as paid from either

your funds or the seller's.

Note. If you meet all of the tests listed

above and you itemize your deductions in the

year you get the loan, you can either deduct the

full amount of points in the year paid or deduct

them over the life of the loan, beginning in the

year you get the loan. If you do not itemize your

deductions in the year you get the loan, you can

spread the points over the life of the loan and

deduct the appropriate amount in each future

year, if any, when you do itemize your deduc-

tions.

Home improvement loan. You can also

fully deduct in the year paid points paid on a

loan to substantially improve your main home if

you meet the first six tests listed earlier.

Refinanced loan. If you use part of the refi-

nanced mortgage proceeds to substantially im-

prove your main home and you meet the first six

tests listed earlier, you can fully deduct the part

of the points related to the improvement in the

year you paid them with your own funds. You

can deduct the rest of the points over the life of

the loan.

Points not fully deductible in year paid.

If you don’t qualify under the exception to de-

duct the full amount of points in the year paid

(or choose not to do so), see Points in Pub. 936

for the rules on when and how much you can

deduct.

Figure A. You can use Figure A as a quick

guide to see whether your points are fully de-

ductible in the year paid.

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Page 6 Publication 530 (2021)

Figure A. Are My Points Fully Deductible This Year?

Start Here:

Is the loan secured by your main home?

Yes

Do you use the cash method of accounting?

Yes

Did you take out the loan to substantially improve your main home?

Did you take out the loan to buy or build your main home?

Yes

You can fully deduct the points this year on Schedule A (Form 1040).

Is the payment of points an established business practice in your

area?

Were the points paid more than the amount generally charged in

your area?

Were the points paid in place of amounts that ordinarily are

separately stated on the settlement sheet?

Were the funds you provided (other than those you borrowed from

your lender or mortgage broker), plus any points the seller paid, at

least as much as the points charged?*

Were the points computed as a percentage of the principal amount

of the mortgage?

Is the amount paid clearly shown as points on the settlement

statement?

You cannot fully deduct the points this year.

See the discussion on Points.

* The funds you provided are not required to have been applied to the points. They can include a down payment, an escrow deposit, earnest money, and other funds

you paid at or before closing for any purpose.

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Publication 530 (2021) Page 7

Amounts charged for services. Amounts

charged by the lender for specific services con-

nected to the loan aren't interest. Examples of

these charges are:

•

Appraisal fees,

•

Notary fees, and

•

Preparation costs for the mortgage note or

deed of trust.

You can't deduct these amounts as points ei-

ther in the year paid or over the life of the mort-

gage. For information about the tax treatment of

these amounts and other settlement fees and

closing costs, see Basis, later.

Points paid by the seller. The term “points”

includes loan placement fees that the seller

pays to the lender to arrange financing for the

buyer.

Treatment by seller. The seller can't de-

duct these fees as interest. However, they are a

selling expense that reduces the seller's

amount realized. See Pub. 523 for more infor-

mation.

Treatment by buyer. The buyer treats

seller-paid points as if he or she had paid them.

If all the tests listed earlier under Exception are

met, the buyer can deduct the points in the year

paid. If any of those tests aren't met, the buyer

must deduct the points over the life of the loan.

The buyer must also reduce the basis of the

home by the amount of the seller-paid points.

For more information about the basis of your

home, see Basis, later.

Funds provided are less than points. If you

meet all the tests listed earlier under Exception

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. In addition, you

can deduct any points paid by the seller.

Example 1. When you took out a $100,000

mortgage loan to buy your home in December,

you were charged one point ($1,000). You meet

all the tests for deducting points in the year paid

(see Exception, earlier), except the only funds

you provided were a $750 down payment. Of

the $1,000 you were charged for points, you

can deduct $750 in the year paid. You spread

the remaining $250 over the life of the mort-

gage.

Example 2. 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. In the year paid, you

can deduct $1,750 ($750 of the amount you

were charged plus the $1,000 paid by the

seller). You spread the remaining $250 over the

life of the mortgage. You must reduce the basis

of your home by the $1,000 paid by the seller.

Excess points. If you meet all the tests under

Exception, earlier, except that the points paid

were more than are generally charged in your

area (test 3), you can deduct in the year paid

only the points that are generally charged. You

must spread any additional points over the life

of the mortgage.

Mortgage ending early. If you spread your

deduction for points over the life of the mort-

gage, you can deduct any remaining balance in

the year the mortgage ends. A mortgage may

end early due to a prepayment, refinancing,

foreclosure, or similar event.

Example. Dan paid $3,000 in points in

2013 that he had to spread out over the 15-year

life of the mortgage. He had deducted $1,600 of

these points through 2020.

Dan prepaid his mortgage in full in 2021. He

can deduct the remaining $1,400 of points in

2021.

Exception. If you refinance the mortgage

with the same lender, you can't deduct any re-

maining points for the year. Instead, deduct

them over the term of the new loan.

Form 1098. The mortgage interest statement

you receive should show not only the total inter-

est paid during the year, but also your deducti-

ble points paid during the year. See Mortgage

Interest Statement, later.

Where To Deduct

Home Mortgage Interest

Enter on Schedule A (Form 1040), line 8a, the

home mortgage interest and points reported to

you on Form 1098 (discussed next). If you

didn't receive a Form 1098, enter your deducti-

ble interest on line 8b, and any deductible

points on line 8c. Deduct mortgage insurance

premiums on Schedule A (Form 1040), line 8d.

See Table 1 for a summary of where to deduct

home mortgage interest, state and local real es-

tate taxes, and qualified mortgage insurance

premiums.

If you paid home mortgage interest to the

person from whom you bought your home,

show that person's name, address, and social

security number (SSN) or employer identifica-

tion number (EIN) on the dotted lines next to

line 8b. The seller must give you this number

and you must give the seller your SSN. Form

W-9, Request for Taxpayer Identification Num-

ber and Certification, can be used for this pur-

pose. Failure to meet either of these require-

ments may result in a $50 penalty for each

failure.

Mortgage Interest Statement

If you paid $600 or more of mortgage interest

(including certain points and mortgage insur-

ance premiums) during the year on any one

mortgage to a mortgage holder in the course of

that holder's trade or business, you should re-

ceive a Form 1098 or similar statement from the

mortgage holder. The statement will show the

total interest paid on your mortgage during the

year. If you bought a main home during the

year, it will also show the deductible points you

paid and any points you can deduct that were

paid by the person who sold you your home.

See Points, earlier.

The interest you paid at settlement should

be included on the statement. If it isn't, add the

interest from the settlement sheet that qualifies

as home mortgage interest to the total shown

on Form 1098 or similar statement. Put the total

on Schedule A (Form 1040), line 8a, and attach

a statement to your return explaining the differ-

ence. Write “See attached” to the right of

line 8a.

A mortgage holder can be a financial institu-

tion, a governmental unit, or a cooperative

housing corporation. If a statement comes from

a cooperative housing corporation, it will gener-

ally show your share of interest.

Your mortgage interest statement for 2021

should be provided or sent to you by January

31, 2022. If it is mailed, you should allow ade-

quate time to receive it before contacting the

mortgage holder. A copy of this form will also be

sent to the IRS.

Example. You bought a new home on May

3. You paid no points on the purchase. During

the year, you made mortgage payments that in-

cluded $4,480 deductible interest on your new

home. The settlement sheet for the purchase of

the home included interest of $620 for 29 days

in May. The mortgage statement you receive

from the lender includes total interest of $5,100

($4,480 + $620). You can deduct the $5,100 if

you itemize your deductions.

Refund of overpaid interest. If you receive a

refund of mortgage interest you overpaid in a

prior year, you will generally receive a Form

1098 showing the refund in box 4. Generally,

you must include the refund in income in the

Where To Deduct Interest and Taxes Paid on Your Home

See the text for information on what expenses are eligible.

IF you are eligible to deduct . . . THEN report the amount

on Schedule A (Form 1040) . . .

state and local real estate taxes line 5b.

home mortgage interest and points reported on

Form 1098

line 8a.

home mortgage interest not reported on

Form 1098

line 8b.

points not reported on Form 1098 line 8c.

qualified mortgage insurance premiums line 8d.

Table 1.

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Page 8 Publication 530 (2021)

year you receive it. See Refund of home mort-

gage interest, earlier, under Home Mortgage In-

terest.

More than one borrower. If you and at least

one other person (other than your spouse if you

file a joint return) were liable for and paid inter-

est 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, at-

tach a statement to your paper return explaining

this. Show how much of the interest each of you

paid, and give the name and address of the per-

son who received the form. Deduct your share

of the interest on Schedule A (Form 1040),

line 8b, and write “See attached” to the right of

that line. Also, deduct your share of any quali-

fied mortgage insurance premiums on Sched-

ule A (Form 1040), line 8d.

Mortgage Insurance

Premiums

You may be able to take an itemized deduction

on Schedule A (Form 1040), line 8d, for premi-

ums you pay or accrue during 2021 for qualified

mortgage insurance in connection with home

acquisition debt on your qualified home.

Mortgage insurance premiums you paid or

accrued on any mortgage insurance contract is-

sued before January 1, 2007, are not deductible

as an itemized deduction.

Qualified Mortgage Insurance

Qualified mortgage insurance is mortgage in-

surance provided by the Department of Veter-

ans Affairs, the Federal Housing Administration,

or the Rural Housing Service, and private mort-

gage insurance (as defined in section 2 of the

Homeowners Protection Act of 1998, as in ef-

fect on December 20, 2006).

Mortgage insurance provided by the Depart-

ment of Veterans Affairs is commonly known as

a funding fee. If provided by the Rural Housing

Service, it is commonly known as a guarantee

fee. The funding fee and guarantee fee can ei-

ther be included in the amount of the loan or

paid in full at the time of closing. These fees can

be deducted fully in 2021 if the mortgage insur-

ance contract was issued in 2021. Contact the

mortgage insurance issuer to determine the de-

ductible amount if it is not reported in box 5 of

Form 1098.

Allocation of prepaid mortgage insurance

premiums. If you paid premiums that are allo-

cable to periods after the close of the tax year,

you must allocate them over the shorter of:

•

The stated term of the mortgage; or

•

84 months, beginning with the month the

insurance was obtained.

The premiums are treated as paid in the year to

which they were allocated. If the mortgage is

satisfied before its term, no deduction is al-

lowed for the unamortized balance. See Pub.

936 for details.

Exception for certain mortgage insur-

ance. The allocation rules, explained above,

do not apply to qualified mortgage insurance

provided by the Department of Veterans Affairs

or Rural Housing Service.

Home Acquisition Debt

Home acquisition debt is a mortgage you took

out after October 13, 1987, to buy, build, or sub-

stantially improve a qualified home. It must also

be secured by that home.

If the amount of your mortgage is more than

the cost of the home plus the cost of any sub-

stantial improvements, only the debt that is not

more than the cost of the home plus improve-

ments qualifies as home acquisition debt.

Home acquisition debt limit. The total

amount you can treat as home acquisition debt

at any time on your home cannot be more than

$1 million ($500,000 if married filing sepa-

rately). However, for taxable years beginning

after December 31, 2017, and before January

1, 2026, there is a further limitation. If you pur-

chased your home during this time, the total

amount you can treat as home acquisition debt

at any time on your home generally cannot be

more than $750,000 ($375,000 if married filing

separately).

Discharges of qualified principal residence

indebtedness. You can exclude from gross in-

come any discharges of qualified principal resi-

dence indebtedness made after 2006 and in

most cases before 2026. You must reduce the

basis of your principal residence (but not below

zero) by the amount you exclude.

Principal residence. Your principal resi-

dence is the home where you ordinarily live

most of the time. You can have only one princi-

pal residence at any one time.

Qualified principal residence indebted-

ness. This indebtedness is a mortgage that

you took out to buy, build, or substantially im-

prove your principal residence and that is se-

cured by that residence. If the amount of your

original mortgage is more than the cost of your

principal residence plus the cost of substantial

improvements, qualified principal residence in-

debtedness can’t be more than the cost of your

principal residence plus improvements.

Any debt secured by your principal resi-

dence that you use to refinance qualified princi-

pal residence indebtedness is qualified princi-

pal residence indebtedness up to the amount of

your old mortgage principal just before the refi-

nancing. Additional debt incurred to substan-

tially improve your principal residence is also

qualified principal residence indebtedness.

Amount you can exclude. You can only

exclude debt discharged after 2006 and in most

cases before 2026. The most you can exclude

is $750,000 ($375,000 if married filing sepa-

rately). You can’t exclude any amount that was

discharged because of services performed for

the lender or on account of any other factor not

directly related either to a decline in the value of

your residence or to your financial condition.

Ordering rule. If only a part of a loan is

qualified principal residence indebtedness, you

can exclude only the amount of the discharge

that is more than the amount of the loan

(immediately before the discharge) that is not

qualified principal residence indebtedness.

Qualified Home

This means your main home or your second

home. A home includes a house, condominium,

cooperative, mobile home, house trailer, boat,

or similar property that has sleeping, cooking,

and toilet facilities.

Main home. You can have only one main

home at any one time. This is the home where

you ordinarily live most of the time.

Second home and other special situations.

If you have a second home, use part of your

home for other than residential living (such as a

home office), rent out part of your home, or are

having your home constructed, see Qualified

Home in Pub. 936.

Limit on Deduction

If your adjusted gross income (AGI) on Form

1040 or 1040-SR, line 11, is more than

$100,000 ($50,000 if your filing status is mar-

ried filing separately), the amount of your mort-

gage insurance premiums that are deductible is

reduced and may be eliminated. See Line 8d in

the Instructions for Schedule A (Form 1040)

and complete the Mortgage Insurance Premi-

ums Deduction Worksheet to figure the amount

you can deduct. If your adjusted gross income

is more than $109,000 ($54,500 if married filing

separately), you can't deduct your mortgage in-

surance premiums.

Form 1098. The amount of mortgage insur-

ance premiums you paid during 2021 may be

shown in box 5 of Form 1098. See Form 1098,

Mortgage Interest Statement in Pub. 936.

Mortgage Interest Credit

The mortgage interest credit is intended to help

lower-income individuals afford home owner-

ship. If you qualify, you can claim the credit on

Form 8396 each year for part of the home mort-

gage interest you pay.

Who qualifies. You may be eligible for the

credit if you were issued a qualified Mortgage

Credit Certificate (MCC) from your state or local

government. Generally, an MCC is issued only

in connection with a new mortgage for the pur-

chase of your main home.

The MCC will show the certificate credit rate

you will use to figure your credit. It will also

show the certified indebtedness amount. Only

the interest on that amount qualifies for the

credit. See Figuring the Credit, later.

You must contact the appropriate gov-

ernment agency about getting an MCC

before you get a mortgage and buy

your home. Contact your state or local housing

finance agency for information about the availa-

bility of MCCs in your area.

How to claim the credit. To claim the credit,

complete Form 8396 and attach it to your Form

TIP

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Publication 530 (2021) Page 9

1040, 1040-SR, or 1040-NR. Include the credit

in your total for Schedule 3 (Form 1040),

line 6g.

Reducing your home mortgage interest de-

duction. If you itemize your deductions on

Schedule A (Form 1040), you must reduce your

home mortgage interest deduction by the

amount of the mortgage interest credit shown

on Form 8396, line 3. You must do this even if

part of that amount is to be carried forward to

2021.

Selling your home. If you purchase a home

after 1990 using an MCC, and you sell that

home within 9 years, you may have to recapture

(repay) all or part of the benefit you received

from the MCC program. For additional informa-

tion, see Paying Back Credits and Subsidies in

Pub. 523.

Figuring the Credit

Figure your credit on Form 8396.

Mortgage not more than certified indebted-

ness. If your mortgage loan amount is equal to

(or smaller than) the certified indebtedness

amount shown on your MCC, enter on Form

8396, line 1, all the interest you paid on your

mortgage during the year.

Mortgage more than certified indebtedness.

If your mortgage loan amount is larger than the

certified indebtedness amount shown on your

MCC, you can figure the credit on only part of

the interest you paid. To find the amount to en-

ter on line 1, multiply the total interest you paid

during the year on your mortgage by the follow-

ing fraction.

Mortgage Larger than Certified

Indebtedness

Certified indebtedness amount on your MCC

Original amount of your mortgage

The fraction won’t change as long as you

are entitled to take the mortgage interest credit.

Example. Emily bought a home this year.

Her mortgage loan is $125,000. The certified in-

debtedness amount on her MCC is $100,000.

She paid $7,500 interest this year. Emily figures

the interest to enter on Form 8396, line 1, as fol-

lows:

$100,000

= 80% (0.80)

$125,000

$7,500 x 0.80 = $6,000

Emily enters $6,000 on Form 8396, line 1. In

each later year, she will figure her credit using

only 80% of the interest she pays for that year.

Limits

Two limits may apply to your credit.

•

A limit based on the credit rate.

•

A limit based on your tax.

Limit based on credit rate. If the certificate

credit rate is higher than 20%, the credit you are

allowed can't be more than $2,000.

Limit based on tax. After applying the limit

based on the credit rate, your credit generally

can't be more than your tax liability. See the

Credit Limit Worksheet in the Form 8396 in-

structions to figure the limit based on tax.

Dividing the Credit

If two or more persons (other than a married

couple filing a joint return) hold an interest in the

home to which the MCC relates, the credit must

be divided based on the interest held by each

person.

Example. John and his brother, George,

were issued an MCC. They used it to get a

mortgage on their main home. John has a 60%

ownership interest in the home, and George

has a 40% ownership interest in the home.

John paid $5,400 mortgage interest this year

and George paid $3,600.

The MCC shows a credit rate of 25% and a

certified indebtedness amount of $130,000.

The loan amount (mortgage) on their home is

$120,000. The credit is limited to $2,000 be-

cause the credit rate is more than 20%.

John figures the credit by multiplying the

mortgage interest he paid this year ($5,400) by

the certificate credit rate (25%) for a total of

$1,350. His credit is limited to $1,200 ($2,000 ×

60% (0.60)).

George figures the credit by multiplying the

mortgage interest he paid this year ($3,600) by

the certificate credit rate (25%) for a total of

$900. His credit is limited to $800 ($2,000 ×

40% (0.40)).

Carryforward

If your allowable credit is reduced because of

the limit based on your tax, you can carry for-

ward the unused portion of the credit to the next

3 years or until used, whichever comes first.

Example. You receive a mortgage credit

certificate from State X. This year, your regular

tax liability is $1,100, you owe no alternative

minimum tax, and your mortgage interest credit

is $1,700. You claim no other credits. Your

unused mortgage interest credit for this year is

$600 ($1,700 − $1,100). You can carry forward

this amount to the next 3 years or until used,

whichever comes first.

Credit rate more than 20%. If you are subject

to the $2,000 limit because your certificate

credit rate is more than 20%, you can't carry for-

ward any amount more than $2,000 (or your

share of the $2,000 if you must divide the

credit).

Example. In the earlier example under Di-

viding the Credit, John and George used the

entire $2,000 credit. The excess

John

$1,350 − $1,200 = $150

George $900 − $800 = $100

$150 for John ($1,350 − $1,200) and $100 for

George ($900 − $800) can't be carried forward

to future years, despite the respective tax liabili-

ties for John and George.

Refinancing

If you refinance your original mortgage loan on

which you had been given an MCC, you must

get a new MCC to be able to claim the credit on

the new loan. The amount of credit you can

claim on the new loan may change. Table 2

summarizes how to figure your credit if you refi-

nance your original mortgage loan.

An issuer may reissue an MCC after you re-

finance your mortgage. If you didn't get a new

MCC, you may want to contact the state or local

housing finance agency that issued your origi-

nal MCC for information about whether you can

get a reissued MCC.

Year of refinancing. In the year of refinancing,

add the applicable amount of interest paid on

the old mortgage and the applicable amount of

interest paid on the new mortgage, and enter

the total on Form 8396, line 1.

If your new MCC has a credit rate different

from the rate on the old MCC, you must attach a

statement to Form 8396. The statement must

show the calculation for lines 1, 2, and 3 for the

part of the year when the old MCC was in effect.

It must show a separate calculation for the part

of the year when the new MCC was in effect.

Table 2. Effect of Refinancing on Your

Credit

Keep for Your Records

IF you get a new (reissued) MCC and the

amount of your new mortgage is...

THEN the interest you claim on Form 8396,

line 1, is*...

smaller than or equal to the certified

indebtedness amount on the new MCC

all the interest paid during the year on your new

mortgage.

larger than the certified indebtedness amount

on the new MCC

interest paid during the year on your new

mortgage multiplied by the following fraction.

Certified indebtedness

amount on your new MCC

Original amount of your

mortgage

* The credit using the new MCC can't be more than the credit using the old MCC.

See New MCC can't increase your credit, later.

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Page 10 Publication 530 (2021)

Combine the amounts from both calculations for

line 3, enter the total on line 3 of the form, and

write “See attached” on the dotted line next to

line 2.

New MCC can't increase your credit. The

credit that you claim with your new MCC can't

be more than the credit that you could have

claimed with your old MCC.

In most cases, the agency that issues your

new MCC will make sure that it doesn't increase

your credit. However, if either your old loan or

your new loan has a variable (adjustable) inter-

est rate, you will need to check this yourself. In

that case, you will need to know the amount of

the credit you could have claimed using the old

MCC.

There are two methods for figuring the credit

you could have claimed. Under one method,

you figure the actual credit that would have

been allowed. This means you use the credit

rate on the old MCC and the interest you would

have paid on the old loan.

If your old loan was a variable rate mort-

gage, you can use another method to deter-

mine the credit that you could have claimed.

Under this method, you figure the credit using a

payment schedule of a hypothetical self-amor-

tizing mortgage with level payments projected

to the final maturity date of the old mortgage.

The interest rate of the hypothetical mortgage is

the annual percentage rate (APR) of the new

mortgage for purposes of the Federal Truth in

Lending Act. The principal of the hypothetical

mortgage is the remaining outstanding balance

of the certified mortgage indebtedness shown

on the old MCC.

You must choose one method and use

it consistently beginning with the first

tax year for which you claim the credit

based on the new MCC.

As part of your tax records, you should

keep your old MCC and the schedule

of payments for your old mortgage.

Basis

Basis is your starting point for figuring a gain or

loss if you later sell your home, or for figuring

depreciation if you later use part of your home

for business purposes or for rent.

While you own your home, you may add cer-

tain items to your basis. You may subtract cer-

tain other items from your basis. These items

are called adjustments to basis and are ex-

plained later under Adjusted Basis.

It is important that you understand these

terms when you first acquire your home be-

cause you must keep track of your basis and

adjusted basis during the period you own your

home. You must also keep records of the

events that affect basis or adjusted basis. See

Keeping Records, later.

Figuring Your Basis

How you figure your basis depends on how you

acquire your home. If you buy or build your

home, your cost is your basis. If you receive

CAUTION

TIP

your home as a gift, your basis is usually the

same as the adjusted basis of the person who

gave you the property. If you inherit your home

from a decedent, different rules apply depend-

ing on the date of the decedent's death. Each of

these topics is discussed later.

Property transferred from a spouse. If your

home is transferred to you from your spouse, or

from your former spouse as a result of a di-

vorce, your basis is the same as your spouse's

(or former spouse's) adjusted basis just before

the transfer. Pub. 504, Divorced or Separated

Individuals, fully discusses transfers between

spouses.

Cost as Basis

The cost of your home, whether you purchased

it or constructed it, is the amount you paid for it,

including any debt you assumed.

The cost of your home includes most settle-

ment or closing costs you paid when you

bought the home. If you built your home, your

cost includes most closing costs paid when you

bought the land or settled on your mortgage.

See Settlement or closing costs, later.

If you elect to deduct the sales taxes

on the purchase or construction of your

home as an itemized deduction on

Schedule A (Form 1040), you can't include the

sales taxes as part of your cost basis in the

home.

Purchase. The basis of a home you bought is

the amount you paid for it. This usually includes

your down payment and any debt you as-

sumed. The basis of a cooperative apartment is

the amount you paid for your shares in the cor-

poration that owns or controls the property. This

amount includes any purchase commissions or

other costs of acquiring the shares.

Construction. If you contracted to have your

home built on land that you own, your basis in

the home is your basis in the land plus the

amount you paid to have the home built. This in-

cludes the cost of labor and materials, the

amount you paid the contractor, any architect's

fees, building permit charges, utility meter and

connection charges, and legal fees that are di-

rectly connected with building your home. If you

built all or part of your home yourself, your basis

is the total amount it cost you to build it. You

can't include in basis the value of your own la-

bor or any other labor for which you didn't pay.

Real estate taxes. Real estate taxes are usu-

ally divided so that you and the seller each pay

taxes for the part of the property tax year that

each owned the home. See the discussion of

Real estate taxes paid at settlement or closing

under State and Local Real Estate Taxes, ear-

lier, to figure the real estate taxes you paid or

are considered to have paid.

If you pay any part of the seller's share of the

real estate taxes (the taxes up to the date of

sale), and the seller didn't reimburse you, add

those taxes to your basis in the home. You can't

deduct them as taxes paid.

If the seller paid any of your share of the real

estate taxes (the taxes beginning with the date

CAUTION

of sale), you can still deduct those taxes. Don’t

include those taxes in your basis. If you didn't

reimburse the seller, you must reduce your ba-

sis by the amount of those taxes.

Example 1. You bought your home on Sep-

tember 1, 2021. The property tax year in your

area is the calendar year, and the tax is due on

August 15. The real estate taxes on the home

you bought were $1,275 for the year and had

been paid by the seller on August 15. You didn't

reimburse the seller for your share of the real

estate taxes from September 1 through Decem-

ber 31. You must reduce the basis of your home

by the $426 [(122 ÷ 365) × $1,275] the seller

paid for you. You can deduct your $426 share

of real estate taxes on your return for the year

you purchased your home.

Example 2. You bought your home on May

3, 2021. The property tax year in your area is

the calendar year. The taxes for the previous

year are assessed on January 2 and are due on

May 31 and November 30. Under state law, the

taxes become a lien on May 31. You agreed to

pay all taxes due after the date of sale. The

taxes due in 2021 for 2020 were $1,375. The

taxes due in 2022 for 2021 will be $1,425.

You can't deduct any of the taxes paid in

2021 because they relate to the 2020 property

tax year and you didn't own the home until

2021. Instead, you add the $1,375 to the cost

(basis) of your home.

You owned the home in 2021 for 243 days

(May 3 to December 31), so you can take a tax

deduction on your 2022 return of $946 [(243 ÷

365) × $1,425] paid in 2022 for 2021. You add

the remaining $479 ($1,425 − $946) of taxes

paid in 2022 to the cost (basis) of your home.

Settlement or closing costs. If you bought

your home, you probably paid settlement or

closing costs in addition to the contract price.

These costs are divided between you and the

seller according to the sales contract, local cus-

tom, or understanding of the parties. If you built

your home, you probably paid these costs when

you bought the land or settled on your mort-

gage.

The only settlement or closing costs you can

deduct are home mortgage interest and certain

real estate taxes. You deduct them in the year

you buy your home if you itemize your deduc-

tions. You can add certain other settlement or

closing costs to the basis of your home.

Items added to basis. You can include in

your basis the settlement fees and closing costs

you paid for buying your home. A fee is for buy-

ing the home if you would have had to pay it

even if you paid cash for the home.

The following are some of the settlement

fees and closing costs that you can include in

the original basis of your home.

•

Abstract fees (abstract of title fees).

•

Charges for installing utility services.

•

Legal fees (including fees for the title

search and preparation of the sales con-

tract and deed).

•

Recording fees.

•

Surveys.

•

Transfer or stamp taxes.

•

Owner's title insurance.

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Publication 530 (2021) Page 11

•

Any amount the seller owes that you agree

to pay, such as back taxes or interest, re-

cording or mortgage fees, cost for im-

provements or repairs, and sales commis-

sions.

If the seller actually paid for any item for

which you are liable and for which you can take

a deduction (such as your share of the real es-

tate taxes for the year of sale), you must reduce

your basis by that amount unless you are

charged for it in the settlement.

Items not added to basis and not deduc-

tible. Here are some settlement and closing

costs that you can't deduct or add to your basis.

1. Fire insurance premiums.

2. Charges for using utilities or other services

related to occupancy of the home before

closing.

3. Rent for occupying the home before clos-

ing.

4. Charges connected with getting or refi-

nancing a mortgage loan, such as:

a. Loan assumption fees,

b. Cost of a credit report, and

c. Fee for an appraisal required by a

lender.

Points paid by seller. If you bought your

home after April 3, 1994, you must reduce your

basis by any points paid for your mortgage by

the person who sold you your home.

If you bought your home after 1990 but be-

fore April 4, 1994, you must reduce your basis

by seller-paid points only if you deducted them.

See Points, earlier, for the rules on deducting

points.

Gift

To figure the basis of property you receive as a

gift, you must know its adjusted basis (defined

later) to the donor just before it was given to

you, its fair market value at the time it was given

to you, and any gift tax paid on it.

Fair market value. Fair market value (FMV) is

the price at which property would change hands

between a willing buyer and a willing seller, nei-

ther being under any compulsion to buy or sell

and who both have a reasonable knowledge of

all the necessary facts.

Donor's adjusted basis is more than FMV. If

someone gave you your home and the donor's

adjusted basis, when it was given to you, was

more than the FMV, your basis at the time of re-

ceipt is the same as the donor's adjusted basis.

Disposition basis. If the donor's adjusted

basis at the time of the gift is more than the

FMV, your basis (plus or minus any required

adjustments; see Adjusted Basis, later) when

you dispose of the property will depend on

whether you have a gain or a loss.

•

Your basis for figuring a gain is the same

as the donor's adjusted basis.

•

Your basis for figuring a loss is the FMV

when you received the gift.

If you use the donor's adjusted basis to figure a

gain and it results in a loss, then you must use

the FMV (at the time of the gift) to refigure the

loss. However, if using the FMV results in a

gain, then you have neither a gain nor a loss.

Example 1. Andrew received a house as a

gift from Ishmael (the donor). At the time of the

gift, the home had an FMV of $80,000. Ish-

mael's adjusted basis was $100,000. After he

received the house, no events occurred to in-

crease or decrease the basis. If Andrew sells

the house for $120,000, he will have a $20,000

gain because he must use the donor's adjusted

basis ($100,000) at the time of the gift as his

basis to figure the gain.

Example 2. Same facts as Example 1, ex-

cept this time Andrew sells the house for

$70,000. He will have a loss of $10,000 be-

cause he must use the FMV ($80,000) at the

time of the gift as his basis to figure the loss.

Example 3. Same facts as Example 1, ex-

cept this time Andrew sells the house for

$90,000. Initially, he figures the gain using Ish-

mael's adjusted basis ($100,000), which results

in a loss of $10,000. Because it is a loss, An-

drew must now recalculate the loss using the

FMV ($80,000), which results in a gain of

$10,000. So in this situation, Andrew will have

neither a gain nor a loss.

Donor's adjusted basis equal to or less

than the FMV. If someone gave you your

home after 1976 and the donor's adjusted ba-

sis, when it was given to you, was equal to or

less than the FMV, your basis at the time of re-

ceipt is the same as the donor's adjusted basis,

plus the part of any federal gift tax paid that is

due to the net increase in value of the home.

Part of federal gift tax due to net in-

crease in value. Figure the part of the federal

gift tax paid that is due to the net increase in

value of the home by multiplying the total fed-

eral gift tax paid by a fraction. The numerator

(top part) of the fraction is the net increase in

the value of the home, and the denominator

(bottom part) is the value of the home for gift tax

purposes after reduction for any annual exclu-

sion and marital or charitable deduction that ap-

plies to the gift. The net increase in the value of

the home is its FMV minus the adjusted basis of

the donor.

Pub. 551 gives more information, including

examples, on figuring your basis when you re-

ceive property as a gift.

Inheritance

Your basis in a home you inherited is generally

the fair market value of the home on the date of

the decedent's death or on the alternative valu-

ation date if the personal representative for the

estate chooses to use alternative valuation.

If an estate tax return was filed, your basis is

generally the value of the home listed on the es-

tate tax return. If you received a Schedule A

(Form 8971) statement from an executor of an

estate or other person required to file an estate

tax return after July 2015, you may be required

to report a basis consistent with the estate tax

value of the property.

If an estate tax return wasn't filed, your basis

is the appraised value of the home at the dece-

dent's date of death for state inheritance or

transmission taxes.

For more information on consistent basis re-

porting, see Column (e)—Cost or Other Basis in

the Instructions for Form 8949. For more infor-

mation on basis of inherited property generally,

see Pub. 551 and Pub. 559.

If you inherited your home from someone

who died in 2010, and the executor of the dece-

dent's estate made the election to file Form

8939, Allocation of Increase in Basis for Prop-

erty Acquired From a Decedent, refer to the in-

formation provided by the executor or see Pub.

4895, Tax Treatment of Property Acquired

From a Decedent Dying in 2010, available at

IRS.gov/Pub/IRS-Prior/p4895-2011.pdf.

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Page 12 Publication 530 (2021)

Adjusted Basis

While you own your home, various events may

take place that can change the original basis of

your home. These events can increase or de-

crease your original basis. The result is called

adjusted basis. See Table 3 for a list of some of

the items that can adjust your basis.

Improvements. An improvement materially

adds to the value of your home, considerably

prolongs its useful life, or adapts it to new uses.

You must add the cost of any improvements to

the basis of your home. You can't deduct these

costs.

Improvements include putting a recreation

room in your unfinished basement, adding an-

other bathroom or bedroom, putting up a fence,

putting in new plumbing or wiring, installing a

new roof, and paving your driveway.

Amount added to basis. The amount you

add to your basis for improvements is your ac-

tual cost. This includes all costs for material and

labor, except your own labor, and all expenses

related to the improvement. For example, if you

had your lot surveyed to put up a fence, the cost

of the survey is a part of the cost of the fence.

You must also add to your basis state and

local assessments for improvements such as

streets and sidewalks if they increase the value

of the property. These assessments are dis-

cussed earlier under State and Local Real Es-

tate Taxes.

Improvements no longer part of home.

Your home's adjusted basis doesn't include the

cost of any improvements that are replaced and

are no longer part of the home.

Example. You put wall-to-wall carpeting in

your home 15 years ago. Later, you replaced

that carpeting with new wall-to-wall carpeting.

The cost of the old carpeting you replaced is no

longer part of your home's adjusted basis.

Repairs versus improvements. A repair

keeps your home in an ordinary, efficient oper-

ating condition. It doesn't add to the value of

your home or prolong its life. Repairs include re-

painting your home inside or outside, fixing your

gutters or floors, fixing leaks or plastering, and

replacing broken window panes. You can't de-

duct repair costs and generally can't add them

to the basis of your home.

However, repairs that are done as part of an

extensive remodeling or restoration of your

home are considered improvements. You add

them to the basis of your home.

Records to keep. You can use Table 4 as

a guide to help you keep track of improvements

to your home. Also see Keeping Records be-

low.

Energy conservation subsidy. If a public util-

ity gives you (directly or indirectly) a subsidy for

the purchase or installation of an energy con-

servation measure for your home, don’t include

the value of that subsidy in your income. You

must reduce the basis of your home by that

value.

An energy conservation measure is an in-

stallation or modification primarily designed to

reduce consumption of electricity or natural gas

or to improve the management of energy de-

mand.

Adoption tax benefits. If you claim an adop-

tion credit for the cost of improvements you

added to the basis of your home, decrease the

basis of your home by the credit allowed. This

also applies to amounts you received under an

employer's adoption assistance program and

excluded from income. For more information,

see Form 8839, Qualified Adoption Expenses.

Keeping Records

Keeping full and accurate records is vi-

tal to properly report your income and

expenses, to support your deductions

and credits, and to know the basis or adjusted

basis of your home. These records include your

purchase contract and settlement papers if you

bought the property, or other objective evidence

if you acquired it by gift, inheritance, or similar

means. You should keep any receipts, can-

celed checks, and similar evidence for improve-

ments or other additions to the basis. In addi-

tion, you should keep track of any decreases to

the basis such as those listed in Table 3.

How to keep records. How you keep records

is up to you, but they must be clear and accu-

rate and must be available to the IRS.

How long to keep records. You must keep

your records for as long as they are important

for meeting any provision of the federal tax law.

Keep records that support an item of in-

come, a deduction, or a credit appearing on a

return until the period of limitations for the return

runs out. (A period of limitations is the period of

time after which no legal action can be brought.)

For assessment of tax you owe, this is generally

3 years from the date you filed the return. For fil-

ing a claim for credit or refund, this is generally

3 years from the date you filed the original re-

turn, or 2 years from the date you paid the tax,

whichever is later. Returns filed before the due

date are treated as filed on the due date.

You may need to keep records relating to

the basis of property (discussed earlier) for lon-

ger than the period of limitations. Keep those

records as long as they are important in figuring

the basis of the original or replacement prop-

erty. Generally, this means for as long as you

own the property and, after you dispose of it, for

the period of limitations that applies to you.

RECORDS

Adjusted Basis

This table lists examples of some items that will generally increase or decrease your basis in your

home. It isn't intended to be all-inclusive.

Increases to Basis Decreases to Basis

•

Improvements:

–

Putting an addition on your home

–

Replacing an entire roof

–

Paving your driveway

–

Installing central air conditioning

–

Rewiring your home

•

Assessments for local improvements

(see Assessments for local benefits

under What You Can and Can't Deduct,

earlier)

•

Amounts spent to restore damaged

property

•

Insurance or other reimbursement

for casualty losses

•

Deductible casualty loss not covered

by insurance

•

Payments received for easement or

right-of-way granted

•

Depreciation allowed or allowable if

home is used for business or rental

purposes

•

Value of subsidy for energy

conservation measure excluded

from income

•

Adoption tax benefits

Table 3.

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Publication 530 (2021) Page 13

How To Get Tax Help

If you have questions about a tax issue; need

help preparing your tax return; or want to

download free publications, forms, or instruc-

tions, go to IRS.gov to find resources that can

help you right away.

Preparing and filing your tax return. After

receiving all your wage and earnings state-

ments (Forms W-2, W-2G, 1099-R, 1099-MISC,

1099-NEC, etc.); unemployment compensation

statements (by mail or in a digital format) or

other government payment statements (Form

1099-G); and interest, dividend, and retirement

statements from banks and investment firms

Record of Home Improvements

Keep this for your records. Also, keep receipts or other proof of

improvements.

Table 4.

Keep for Your Records

CAUTION

Remove from this record any improvements that are no longer part of your main home. For example, if you put wall-to-wall

carpeting in your home and later replace it with new wall-to-wall carpeting, remove the cost of the first carpeting.

(a)

Type of Improvement

(b)

Date

(c)

Amount

(a)

Type of Improvement

(b)

Date

(c)

Amount

Additions:

Heating & Air

Conditioning:

Bedroom Heating system

Bathroom Central air conditioning

Deck Furnace

Garage Duct work

Porch Central humidifier

Patio Filtration system

Storage shed Other

Fireplace

Electrical:Other

Lawn & Grounds:

Lighting fixtures

Wiring upgrades

Landscaping Other

Driveway

Plumbing:

Walkway

Fences Water heater

Retaining wall Soft water system

Sprinkler system Filtration system

Swimming pool Other

Exterior lighting

Insulation:Other

Communications:

Attic

Walls

Satellite dish Floors

Intercom Pipes and duct work

Security system Other

Other

Miscellaneous:

Interior

Improvements:

Storm windows and

doors

Built-in appliances

Roof Kitchen modernization

Central vacuum Bathroom modernization

Other Flooring

Wall-to-wall carpeting

Other

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Page 14 Publication 530 (2021)

(Forms 1099), you have several options to

choose from to prepare and file your tax return.

You can prepare the tax return yourself, see if

you qualify for free tax preparation, or hire a tax

professional to prepare your return.

For 2021, if you received an Economic

Impact Payment (EIP), refer to your

Notice 1444-C, Your 2021 Economic

Impact Payment. If you received Advance Child

Tax Credit payments, refer to your Letter 6419.

Free options for tax preparation. Go to

IRS.gov to see your options for preparing and

filing your return online or in your local commun-

ity, if you qualify, which include the following.

•

Free File. This program lets you prepare

and file your federal individual income tax

return for free using brand-name tax-prep-

aration-and-filing software or Free File filla-

ble forms. However, state tax preparation

may not be available through Free File. Go

to IRS.gov/FreeFile to see if you qualify for

free online federal tax preparation, e-filing,

and direct deposit or payment options.

•

VITA. The Volunteer Income Tax Assis-

tance (VITA) program offers free tax help

to people with low-to-moderate incomes,

persons with disabilities, and limited-Eng-

lish-speaking taxpayers who need help

preparing their own tax returns. Go to

IRS.gov/VITA, download the free IRS2Go

app, or call 800-906-9887 for information

on free tax return preparation.

•

TCE. The Tax Counseling for the Elderly

(TCE) program offers free tax help for all

taxpayers, particularly those who are 60

years of age and older. TCE volunteers

specialize in answering questions about

pensions and retirement-related issues

unique to seniors. Go to IRS.gov/TCE,

download the free IRS2Go app, or call

888-227-7669 for information on free tax

return preparation.

•

MilTax. Members of the U.S. Armed

Forces and qualified veterans may use Mil-

Tax, a free tax service offered by the De-

partment of Defense through Military One-

Source. For more information go to

MilitaryOneSource (MilitaryOneSource.mil/

Tax).

Also, the IRS offers Free Fillable

Forms, which can be completed online and

then filed electronically regardless of in-

come.

Using online tools to help prepare your re-

turn. Go to IRS.gov/Tools for the following.

•

The Earned Income Tax Credit Assistant

(IRS.gov/EITCAssistant) determines if

you’re eligible for the earned income credit

(EIC).

•

The Online EIN Application (IRS.gov/EIN)

helps you get an employer identification

number (EIN) at no cost.

•

The Tax Withholding Estimator (IRS.gov/

W4app) makes it easier for everyone to

pay the correct amount of tax during the

year. The tool is a convenient, online way

to check and tailor your withholding. It’s

more user-friendly for taxpayers, including

retirees and self-employed individuals. The

features include the following.

▶ Easy to understand language.

CAUTION

▶ The ability to switch between

screens, correct previous entries, and skip

screens that don’t apply.

▶ Tips and links to help you determine

if you qualify for tax credits and deduc-

tions.

▶ A progress tracker.

▶ A self-employment tax feature.

▶ Automatic calculation of taxable so-

cial security benefits.

•

The First-Time Homebuyer Credit Account

Look-up (IRS.gov/HomeBuyer) tool pro-

vides information on your repayments and

account balance.

•

The Sales Tax Deduction Calculator

(IRS.gov/SalesTax) figures the amount you

can claim if you itemize deductions on

Schedule A (Form 1040).

Getting answers to your tax ques-

tions. On IRS.gov, you can get

up-to-date information on current

events and changes in tax law.

•

IRS.gov/Help: A variety of tools to help you

get answers to some of the most common

tax questions.

•

IRS.gov/ITA: The Interactive Tax Assistant,

a tool that will ask you questions and,

based on your input, provide answers on a

number of tax law topics.

•

IRS.gov/Forms: Find forms, instructions,

and publications. You will find details on

2021 tax changes and hundreds of interac-

tive links to help you find answers to your

questions.

•

You may also be able to access tax law in-

formation in your electronic filing software.

Need someone to prepare your tax return?

There are various types of tax return preparers,

including tax preparers, enrolled agents, certi-

fied public accountants (CPAs), attorneys, and

many others who don’t have professional cre-

dentials. If you choose to have someone pre-

pare your tax return, choose that preparer

wisely. A paid tax preparer is:

•

Primarily responsible for the overall sub-

stantive accuracy of your return,

•

Required to sign the return, and

•

Required to include their preparer tax iden-

tification number (PTIN).

Although the tax preparer always signs the

return, you're ultimately responsible for provid-

ing all the information required for the preparer

to accurately prepare your return. Anyone paid

to prepare tax returns for others should have a

thorough understanding of tax matters. For

more information on how to choose a tax pre-

parer, go to Tips for Choosing a Tax Preparer

on IRS.gov.

Advance child tax credit payments. From

July through December 2021, advance pay-

ments were sent automatically to taxpayers with

qualifying children who met certain criteria. The

advance child tax credit payments were early

payments of up to 50% of the estimated child

tax credit that taxpayers may properly claim on

their 2021 returns. Go to IRS.gov/AdvCTC for

more information about these payments and

how they can affect your taxes.

Coronavirus. Go to IRS.gov/Coronavirus for

links to information on the impact of the corona-

virus, as well as tax relief available for individu-

als and families, small and large businesses,

and tax-exempt organizations.

Employers can register to use Business

Services Online. The Social Security Adminis-

tration (SSA) offers online service at SSA.gov/

employer for fast, free, and secure online W-2

filing options to CPAs, accountants, enrolled

agents, and individuals who process Form W-2,

Wage and Tax Statement, and Form W-2c,

Corrected Wage and Tax Statement.

IRS social media. Go to IRS.gov/SocialMedia

to see the various social media tools the IRS

uses to share the latest information on tax

changes, scam alerts, initiatives, products, and

services. At the IRS, privacy and security are

our highest priority. We use these tools to share

public information with you. Don’t post your so-

cial security number (SSN) or other confidential

information on social media sites. Always pro-

tect your identity when using any social net-

working site.

The following IRS YouTube channels pro-

vide short, informative videos on various tax-re-

lated topics in English, Spanish, and ASL.

•

Youtube.com/irsvideos.

•

Youtube.com/irsvideosmultilingua.

•

Youtube.com/irsvideosASL.

Watching IRS videos. The IRS Video portal

(IRSVideos.gov) contains video and audio pre-

sentations for individuals, small businesses,

and tax professionals.

Online tax information in other languages.

You can find information on IRS.gov/

MyLanguage if English isn’t your native lan-

guage.

Free Over-the-Phone Interpreter (OPI) Serv-

ice. The IRS is committed to serving our multi-

lingual customers by offering OPI services. The

OPI service is a federally funded program and

is available at Taxpayer Assistance Centers

(TACs), other IRS offices, and every VITA/TCE

return site. OPI service is accessible in more

than 350 languages.

Accessibility Helpline available for taxpay-

ers with disabilities. Taxpayers who need in-

formation about accessibility services can call

833-690-0598. The Accessibility Helpline can

answer questions related to current and future

accessibility products and services available in

alternative media formats (for example, braille,

large print, audio, etc.).

Getting tax forms and publications. Go to

IRS.gov/Forms to view, download, or print all of

the forms, instructions, and publications you

may need. Or, you can go to IRS.gov/

OrderForms to place an order.

Getting tax publications and instructions in

eBook format. You can also download and

view popular tax publications and instructions

(including the Instructions for Form 1040) on

mobile devices as eBooks at IRS.gov/eBooks.

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Publication 530 (2021) Page 15

Note. IRS eBooks have been tested using

Apple's iBooks for iPad. Our eBooks haven’t

been tested on other dedicated eBook readers,

and eBook functionality may not operate as in-

tended.

Access your online account (individual tax-

payers only). Go to IRS.gov/Account to se-

curely access information about your federal tax

account.

•

View the amount you owe and a break-

down by tax year.

•

See payment plan details or apply for a

new payment plan.

•

Make a payment or view 5 years of pay-

ment history and any pending or sched-

uled payments.

•

Access your tax records, including key

data from your most recent tax return, your

EIP amounts, and transcripts.

•

View digital copies of select notices from

the IRS.

•

Approve or reject authorization requests

from tax professionals.

•

View your address on file or manage your

communication preferences.

Tax Pro Account. This tool lets your tax pro-

fessional submit an authorization request to ac-

cess your individual taxpayer IRS online

account. For more information, go to IRS.gov/

TaxProAccount.

Using direct deposit. The fastest way to re-

ceive a tax refund is to file electronically and

choose direct deposit, which securely and elec-

tronically transfers your refund directly into your

financial account. Direct deposit also avoids the

possibility that your check could be lost, stolen,

or returned undeliverable to the IRS. Eight in 10

taxpayers use direct deposit to receive their re-

funds. If you don’t have a bank account, go to

IRS.gov/DirectDeposit for more information on

where to find a bank or credit union that can

open an account online.

Getting a transcript of your return. The

quickest way to get a copy of your tax transcript

is to go to IRS.gov/Transcripts. Click on either

“Get Transcript Online” or “Get Transcript by

Mail” to order a free copy of your transcript. If

you prefer, you can order your transcript by call-

ing 800-908-9946.

Reporting and resolving your tax-related

identity theft issues.

•

Tax-related identity theft happens when

someone steals your personal information

to commit tax fraud. Your taxes can be af-

fected if your SSN is used to file a fraudu-

lent return or to claim a refund or credit.

•

The IRS doesn’t initiate contact with tax-

payers by email, text messages, telephone

calls, or social media channels to request

personal or financial information. This in-

cludes requests for personal identification

numbers (PINs), passwords, or similar in-

formation for credit cards, banks, or other

financial accounts.

•

Go to IRS.gov/IdentityTheft, the IRS Iden-

tity Theft Central webpage, for information

on identity theft and data security protec-

tion for taxpayers, tax professionals, and

businesses. If your SSN has been lost or

stolen or you suspect you’re a victim of

tax-related identity theft, you can learn

what steps you should take.

•

Get an Identity Protection PIN (IP PIN). IP

PINs are six-digit numbers assigned to tax-

payers to help prevent the misuse of their

SSNs on fraudulent federal income tax re-

turns. When you have an IP PIN, it pre-

vents someone else from filing a tax return

with your SSN. To learn more, go to

IRS.gov/IPPIN.

Ways to check on the status of your refund.

•

Go to IRS.gov/Refunds.

•

Download the official IRS2Go app to your

mobile device to check your refund status.

•

Call the automated refund hotline at

800-829-1954.

Note. The IRS can’t issue refunds before

mid-February 2022 for returns that claimed the

EIC or the additional child tax credit (ACTC).

This applies to the entire refund, not just the

portion associated with these credits.

Making a tax payment. Go to IRS.gov/

Payments for information on how to make a

payment using any of the following options.

•

IRS Direct Pay: Pay your individual tax bill

or estimated tax payment directly from

your checking or savings account at no

cost to you.

•

Debit or Credit Card: Choose an approved

payment processor to pay online or by

phone.

•

Electronic Funds Withdrawal: Schedule a

payment when filing your federal taxes us-

ing tax return preparation software or

through a tax professional.

•

Electronic Federal Tax Payment System:

Best option for businesses. Enrollment is

required.

•

Check or Money Order: Mail your payment

to the address listed on the notice or in-

structions.

•

Cash: You may be able to pay your taxes

with cash at a participating retail store.

•

Same-Day Wire: You may be able to do

same-day wire from your financial institu-

tion. Contact your financial institution for

availability, cost, and time frames.

Note. The IRS uses the latest encryption

technology to ensure that the electronic pay-

ments you make online, by phone, or from a

mobile device using the IRS2Go app are safe

and secure. Paying electronically is quick, easy,

and faster than mailing in a check or money or-

der.

What if I can’t pay now? Go to IRS.gov/

Payments for more information about your op-

tions.

•

Apply for an online payment agreement

(IRS.gov/OPA) to meet your tax obligation

in monthly installments if you can’t pay

your taxes in full today. Once you complete

the online process, you will receive imme-

diate notification of whether your agree-

ment has been approved.

•

Use the Offer in Compromise Pre-Qualifier

to see if you can settle your tax debt for

less than the full amount you owe. For

more information on the Offer in Compro-

mise program, go to IRS.gov/OIC.

Filing an amended return. You can now file

Form 1040-X electronically with tax filing soft-

ware to amend 2019 or 2020 Forms 1040 and

1040-SR. To do so, you must have e-filed your

original 2019 or 2020 return. Amended returns

for all prior years must be mailed. Go to

IRS.gov/Form1040X for information and up-

dates.

Checking the status of your amended re-

turn. Go to IRS.gov/WMAR to track the status

of Form 1040-X amended returns.

Note. It can take up to 3 weeks from the

date you filed your amended return for it to

show up in our system, and processing it can

take up to 16 weeks.

Understanding an IRS notice or letter

you’ve received. Go to IRS.gov/Notices to

find additional information about responding to

an IRS notice or letter.

You can use Schedule LEP, Request for

Change in Language Preference, to state a

preference to receive notices, letters, or other

written communications from the IRS in an al-

ternative language, when these are available.

Once your Schedule LEP is processed, the IRS

will determine your translation needs and pro-

vide you translations when available. If you

have a disability requiring notices in an accessi-

ble format, see Form 9000.

Contacting your local IRS office. Keep in

mind, many questions can be answered on

IRS.gov without visiting an IRS TAC. Go to

IRS.gov/LetUsHelp for the topics people ask

about most. If you still need help, IRS TACs

provide tax help when a tax issue can’t be han-

dled online or by phone. All TACs now provide

service by appointment, so you’ll know in ad-

vance that you can get the service you need

without long wait times. Before you visit, go to

IRS.gov/TACLocator to find the nearest TAC

and to check hours, available services, and ap-

pointment options. Or, on the IRS2Go app, un-

der the Stay Connected tab, choose the Con-

tact Us option and click on “Local Offices.”

The Taxpayer Advocate

Service (TAS) Is Here To

Help You

What Is TAS?

TAS is an independent organization within the

IRS that helps taxpayers and protects taxpayer

rights. Their job is to ensure that every taxpayer

is treated fairly and that you know and under-

stand your rights under the Taxpayer Bill of

Rights.

How Can You Learn About Your

Taxpayer Rights?

The Taxpayer Bill of Rights describes 10 basic

rights that all taxpayers have when dealing with

the IRS. Go to TaxpayerAdvocate.IRS.gov to

help you understand what these rights mean to

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Page 16 Publication 530 (2021)

you and how they apply. These are your rights.

Know them. Use them.

What Can TAS Do for You?

TAS can help you resolve problems that you

can’t resolve with the IRS. And their service is

free. If you qualify for their assistance, you will

be assigned to one advocate who will work with

you throughout the process and will do every-

thing possible to resolve your issue. TAS can

help you if:

•

Your problem is causing financial difficulty

for you, your family, or your business;

•

You face (or your business is facing) an

immediate threat of adverse action; or

•

You’ve tried repeatedly to contact the IRS

but no one has responded, or the IRS

hasn’t responded by the date promised.

How Can You Reach TAS?

TAS has offices in every state, the District of

Columbia, and Puerto Rico. Your local advo-

cate’s number is in your local directory and at

TaxpayerAdvocate.IRS.gov/Contact-Us. You

can also call them at 877-777-4778.

How Else Does TAS Help

Taxpayers?

TAS works to resolve large-scale problems that

affect many taxpayers. If you know of one of

these broad issues, report it to them at IRS.gov/

SAMS.

TAS for Tax Professionals

TAS can provide a variety of information for tax

professionals, including tax law updates and

guidance, TAS programs, and ways to let TAS

know about systemic problems you’ve seen in

your practice.

Low Income Taxpayer

Clinics (LITCs)

LITCs are independent from the IRS. LITCs

represent individuals whose income is below a

certain level and need to resolve tax problems

with the IRS, such as audits, appeals, and tax

collection disputes. In addition, LITCs can pro-

vide information about taxpayer rights and re-

sponsibilities in different languages for individu-

als who speak English as a second language.

Services are offered for free or a small fee for

eligible taxpayers. To find an LITC near you, go

to TaxpayerAdvocate.IRS.gov/about-us/Low-

Income-Taxpayer-Clinics-LITC or see IRS Pub.

4134, Low Income Taxpayer Clinic List.

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Publication 530 (2021) Page 17

To help us develop a more useful index, please let us know if you have ideas for index entries.

See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.

Index

Adjusted basis 13

Assessments:

For local benefits 4

Homeowners association 4

Assistance (See Tax help)

Basis 11

Certificate, mortgage credit 9

Construction 11

Cooperatives 4, 5

Cost basis 11

Credit:

Mortgage interest 9

Deduction:

Home mortgage interest 5

Real estate taxes 3

Disaster loans 5

Emergency Homeowners' Loan

Program 3

Escrow accounts 3

Fire insurance premiums 12

Form:

1098 8

8396 9, 10

Gift of home 12

Ground rent 5

HFA Hardest Hit Fund 3

Home:

Acquisition debt 9

Inherited 12

Mortgage interest 4

Purchase of 11

Received as gift 12

Homeowners Assistance Fund 3

Homeowners association

assessments 4

House payment 2

Housing allowance, minister or

military 2

Improvements 13, 14

Inheritance 12

Insurance 12

Interest:

Home mortgage 4

Prepaid 5

Keeping records 13

Late payment charge 5

Local benefits, assessments

for 4

MCC (Mortgage credit

certificate) 9

Minister's or military housing

allowance 2

Mortgage credit certificate

(MCC) 9

Mortgage debt forgiveness 9

Mortgage insurance premiums 9

Mortgage interest:

Credit 9

Deduction 5

Late payment charge 5

Paid at settlement 5

Refund 5, 8

Statement 8

Mortgage prepayment penalty 5

Nondeductible payments 2, 12

Points 5

Prepaid interest 5

Publications (See Tax help)

Recordkeeping 13

Refund of:

Mortgage interest 5, 8

Real estate taxes 4

Repairs 13

Sales taxes 4

SBA Disaster loans 5

Settlement or closing costs:

Basis of home 11

Mortgage interest 5

Real estate taxes 3, 11

Stamp taxes 4

State and local real estate

taxes 3

Deductible 3

Paid at settlement or closing 3

Refund or rebate 4

Statement, mortgage interest 8

Taxes:

Real estate 4

Sales taxes 4

State and local real estate 3

Tax help 14

Transfer taxes 4

What you can and can’t deduct 2

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Page 18 Publication 530 (2021)