QUESTION: Is there a maximum tax you can write off for a home mortgage?
ANSWER: Yes, there is a limit to the amount of mortgage interest you can deduct on your taxes, which depends on when you took out the mortgage and the amount of the loan.
1. Current Limits on Mortgage Interest Deduction
Mortgages Taken Out After December 15, 2017: For mortgages taken out after December 15, 2017, you can deduct interest on the first $750,000 ($375,000 if married filing separately) of mortgage debt used to buy, build, or improve your home.
2. Mortgages Taken Out Before December 15, 2017: For mortgages taken out before this date, you can deduct interest on the first $1 million ($500,000 if married filing separately) of mortgage debt.
*Additional Considerations:
Home Equity Loans: Interest on home equity loans or lines of credit is deductible only if the borrowed funds are used to buy, build, or substantially improve the taxpayer’s home that secures the loan. The total of all loans, including the original mortgage, must not exceed the limits mentioned above.
Itemizing Deductions: You must itemize your deductions on Schedule A of Form 1040 to claim a mortgage interest deduction.
Primary and Secondary Homes: The mortgage interest deduction can apply to interest paid on both primary and secondary homes, subject to the combined mortgage limit.
ASK MICKEY, CPA Tax Tips for Tax Year 2024
