Which of the following statements is false? Points paid in refinancing a residential mortgage are fully deductible in the year the loan is closed providing they meet the area's business practice criteria. Appraisal fees, preparation costs for legal documents, and notary fees are not for the use or forbearance of money and therefore are not deductible as interest although some lenders may label them as "points." For mortgages on commercial property, points constitute prepaid interest and may not be deducted in full in the year paid, but instead must be deducted (amortized) over the life of the loan. If a taxpayer refinances his residential mortgage but fails to pay the points out private funds, and instead had the points deducted from the loan proceeds, the taxpayer may only deduct the points ratably over the life term of the loan.

Which of the following statements is false? Under IRC107 ministers of the gospel may exclude from their gross income the portion of their salary designated as a housing allowance so long as it is all spent for either rent or expenditures related to owning a home (i.e. mortgage payments, taxes, insurance, repairs, etc.). Because ministers may exclude their housing allowance from gross income, ministers of the gospel may not also deduct residential mortgage interest because to do so will result in a double tax benefit. Payments on non-redeemable ground rents on a residence are not interest and are not tax deductible. Redeemable ground rents exist where the economic substance of the lessor's lease interest is primarily a security interest to protect the receipt of rental payments, Such payments are generally treated as interest payments and are subject to the rules on qualified mortgage interest.