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.
As a side note, the IRS can audit you for longer than three years after the return, but the obligation to prove wrongdoing is on the IRS after this time. One exception to the three year rule is if you claim a deduction writing off bad debt or securities. In these cases, keep the tax return for seven years.s a side note, the IRS can audit you for longer than three years after the return, but the obligation to prove wrongdoing is on the IRS after this time. One exception to the three year rule is if you claim a deduction writing off bad debt or securities. In these cases, keep the tax return for seven years.