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.
So the IRS could decide to audit your 2016 tax situation five years (or more) from now, and hit you with a tax bill plus interest and penalties. In contrast, if you file a 2016 return showing zero federal income tax liability, the IRS generally must begin any audit of your 2016 tax year within three years of the filing date.