Which of the following statements about mortgage interest deductions is correct?

The correct statement is that mortgage interest is deductible from federal income tax. This deduction allows homeowners to reduce their taxable income by the amount of interest paid on the mortgage for their primary residence and, in some cases, a second home. This tax benefit is designed to encourage home ownership by making it more affordable for borrowers.

Regarding the other options, mortgage interest deductions are indeed available for rental properties as well, making the claim about it not being allowed for such properties inaccurate. The deduction is not restricted to first mortgages, as interest from home equity loans can also be deductible under certain conditions. Lastly, the mortgage interest deduction is applicable in the year the interest is paid, rather than being contingent upon the sale of the home.