Qualifying for the Mortgage Interest Deduction. Mortgage interest includes that which you pay on loans to buy a home, on home equity lines of credit and on construction loans. The deduction is limited to interest paid on your main home and/or a second home. Interest paid on a third or fourth homes isn't deductible.
The statute of limitations on how far back the IRS can audit (called the Assessment Statute Expiration Date or ASED) varies depending upon the circumstances of the tax return. In most cases the IRS will not go back more than 3 years unless there is something very wrong with the tax return that was filed.
The department may audit your return up to 3Â½ years after it is due or filed (whichever is later). This time limit can be extended if you: 1  Amend a return or the IRS adjusts your federal return. 2  Sign an agreement with the IRS to extend the time to adjust your federal return.