I'll be receiving a one-time retirement fee next year. Thus, my annual salary next year will be doubled because of this retirement fee, I was thinking of buying a house (first time buyer). Then file for advance (multiple) mortgage interest deduction.

Can I file multiple years (advance) mortgage interest deduction?

(I've heard that if you have a bonus or a one-time income that year you purchased a house you could file for advance mortgage interest deduction)

You don't file for an advanced interest deduction - you put a bigger downpayment on the loan instead. You can only do the advanced interest deduction if you already own the home and already have a home mortgage. You don't have a mortgage yet so you can't do this. And why would you want to do this when you can just put a larger downpayment down in the first place to lower your mortgage.

No - you may deduct mortgage interest only in the year it is due. In fact, even if you pre-pay interest not due until later years, you must spread out the deduction across all the years it is actually due. You may want to review IRS Pub 928: Publication 936 (2009), Home Mortgage Interest Deduction (http://www.irs.gov/publications/p936/index.html)

Twinkiedooter,
Thank you for the input. I want to prepay mortgage interest next year (of course after buying a house) to minimize the taxable for next year. Because next year my annual income will be double because of the one-time retirement fee I will be receiving.

I checked the net and it seems feasible. But as ebaines noted I must spread out the deduction across all the years. And I also need proper planning because in the coming years I will not be able to claim deduction.

(Here is the link regarding prepay mortgage interest)
PrePay Mortgage Interest Now to Avoid Taxes | Real Estate | Mortgages | Get the best rates on mortgage, home equity loans, CD, money markets and checking accounts | BankingMyWay (http://www.bankingmyway.com/real-estate/mortgages/prepay-mortgage-interest-now-avoid-taxes)

Ebaines,
Thank you for the link regarding Mortgage interest deduction. I'll do further reading.
Sorry, I'm new in this field and need more advice/reading to grasp the basics.