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.

Which of the following statements is false? Taxes paid by a husband on a home owned by his wife are not deductible by the husband on the husband's separate tax return. Special assessments paid to improve streets, sidewalks, and other like improvements are not deductible as real estate taxes even though they are assessed by a county or municipality for the public welfare. If a taxpayer's mortgage requires his real estate taxes to be "escrowed," or included in the taxpayer's mortgage payment, the taxes are deductible and deemed paid when the taxpayer pays his mortgage payment. Annual assessments paid to homeowner associations to maintain common areas are not deductible as real estate taxes.

Which of the following statements is true? A taxpayer may not deduct a late charge or penalty assessed by a lender when the fee or penalty is for specific services performed by the lender. Prepayment penalties charged by a lender for paying off a mortgage earlier than its stated term are not deductible as home mortgage interest. Losses to a taxpayer's residence due to fire, theft, and other casualty are not deductible unless the home is used for business purposes. Losses to a taxpayer's residence resulting from deterioration over a period of time are deductible as casualty losses subject to certain dollar limitations.

Which of the following is NOT a requirement to deduct a casualty loss on a taxpayer's residence? The portion of the loss that is deducted must be uninsured (policy deductible) or unreimbursed by the insurance company. For some years, only net losses exceeding ten percent of the taxpayer's adjusted gross income are tax deductible. For tax years after 2018, in addition to the 10% adjusted gross income limitation, the first $500.00 of each casualty loss event is not allowed as a deduction similar to a "deductible" clause in an insurance policy. For some years, generally, for a loss to be deductible as a casualty, the loss must result from a sudden unexpected event except for losses due to corrosive drywall. A taxpayer, in 2018, may claim a personal casualty loss not attributable to federally declared disasters if it is to offset a personal casualty gain.