Interest expense deduction

Though you can no longer deduct interest payments on consumer loans for such purchases as cars and credit card balances, there are still tax breaks available if you're paying a home mortgage or a student loan. For home mortgages, the deductions are limited to the interest and any points you paid on a mortgage. Extra charges like title search fees and commissions paid when buying or selling a home do not qualify as eligible deductions. Student loan interest may be deductible if payments were due and made after 1997. The maximum deduction for qualified student loans has increased to $4,000for the 2004 tax year. Also, look for tax breaks on loans used to buy, build, or improve a principal residence or second home. If you use your home as collateral to borrow money, the interest on these home-equity loans may be deductible as well. These tips are meant to provide general information on federal income taxes. For specific advice, please consult a tax advisor or call the toll-free number for Federal Tax Information and Assistance at 1-800-829-1040.