Tax Strategies for Homeowners

Keep in mind that $1 million is an aggregate max. So while you can deduct the mortgage interest on a second home, that $1 million cap applies to both loans. Thankfully, your real estate tax deduction is unlimited. So if you pay taxes on two homes, deduct away.

Get Points for Refinancing

You may have paid points -- loan origination fees or discount points -- when you got your mortgage. Points are extra charges paid up front to get a lower interest rate on your mortgage. If you paid points in 2006, deduct them on your Schedule A.

On the flip side, if you paid points on a refinancing, they must be amortized over the life of the loan, says Scharin. So if you paid $3,000 in points on a 30-year loan, deduct $100 each year.

Let's say you refinanced a second time in 2006 (not out of the question). The points you were amortizing on the first refinance are now fully deductible. So deduct those and get rid of them, because the loan is gone. The points you paid on the newly refinanced loan must again be amortized.

With any mortgage, you should've gotten a Form 1098 -- Mortgage Interest Statement by the end of January showing the amount of deductible interest you paid on that loan in 2006. Form 1098 also reports any points paid in that year. But the form does not keep track of amortized points.