In years past, mortgage interest has been tax deductible for a large majority of home owners, however with the new tax law changes in 2018, not as many home owners will be writing off their mortgage interest.
Here is the inside scoop:
- DO YOU ITEMIZE YOUR DEDUCTIONS?
You cannot take the mortgage interest deduction if you are taking the standard deduction. In 2018, the standard deduction is $12,000 for a single tax payer, $18,000 for heads of household, and $24,000 for married tax payers filing a joint return.
- IS YOUR HOME A “QUALIFIED RESIDENCE”?
Mortgage interest is only deductible if the mortgage is attached to a “qualified residence”. Taxpayers can generally deduct the mortgage interest on two qualified homes including primary residence & one vacation home.
- IS YOUR MORTGAGE CLASSIFIED AS “ACQUISITION INDEBTEDNESS”?
Your mortgage or home equity line of credit is considered “acquisition indebtedness” if it was used to buy, build or improve a qualified residence. Generally you can deduct the interest on mortgage balances up to $750,000 of acquisition indebtedness.
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vacation home that is elected as a “qualified residence” for tax purposes. Be sure to see IRS Publication 527 for information regarding investment properties.
The information in this blog is an overview for informational purposes. Please refer to IRS Publication 936 for specifics.
We are not tax advisers – be sure to speak with CPA.