Definition: The word "mortgage" refers to a financial product that offers an asset-backed security backed by your home, which can be used as collateral in a loan with other lenders. This creates a new debt on top of existing loans or debts. In the context of US tax law, if you own your home outright or have paid off the mortgage and no longer use it for personal reasons (for example, refinancing to a more affordable interest rate), then you can claim the mortgage as an itemized deduction from your taxable income. This means that you will be able to deduct 10% of your mortgage payments from your taxable income. The word "are mortgage interest tax deductible" essentially means that if you are making regular and consistent mortgage payments towards your home, even if you pay less than the minimum payment due on time or have had no problems with the mortgage for a year or more, then you can claim this deduction as a tax credit. This is often referred to as "credit sale" or "deleveraging," since you are essentially selling off the mortgage and reclaiming your income through deductions from your taxable income. It's important to note that this deduction is limited under certain circumstances, such as if you have refinanced your mortgage with another lender or if there were any major changes to the loan terms (such as a new interest rate or higher monthly payment due date). Additionally, the amount of the credit sale can vary depending on your personal financial situation and the specific tax laws in your jurisdiction.
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