Do you have a "high loan-to-value" (high-LTV) home equity loan in which the total amount of your mortgage debt exceeds the fair market value of your home? If so, be careful how much home mortgage interest you claim against your federal income taxes.

Under long-standing federal tax rules, mortgage interest deductions are limited to interest on loan amounts up to--but no greater than--the market value of your home when the loan was closed. That means that interest is not deductible on the top 25% portion of a 125% loan-to-value mortgage you may have taken out to consolidate debt.

Plans are underway at the IRS to create a new method for identifying homeowners who have mortgages that exceed their home values. Federal tax officials drafted a revised form 1098 (copies of which lenders send to both you and the IRS) which requires lenders to check a new box if they believe a borrower has a high-LTV loan. So before completing your next tax return, remember: "big brother is watching."

For a free consultation to discuss which type of mortgage loan will work best for you, call Victoria Spannaus at Wachovia Mortgage Corp. at

(800) 741-7813 or 910-692-6225.