Tax Q&A: Mortgage Madness

Editor's Note: Tracy Byrnes will be answering questions throughout the tax season to help guide you through your return. Please send her an email to ask a tax-related question. She will pick a few each week to answer for all of our readers.

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Is mortgage interest only deductible from the first two liens on a primary residence? Also, can a state stamp tax paid in a mortgage closing qualify as a state tax that can be written off as an itemized deduction? -- R.N.

As we mentioned in our piece last week, you can deduct the interest on home mortgage loans up to $1 million. So it doesn't matter how many loans you have on your residence. What matters for deductibility purposes is whether the loans were used to purchase or improve your home, says Mark Luscombe, a principal federal tax analyst with CCH, a provider of tax and business-law information. ...