Mortgage Interest Deduction and Excess Mortgage Rule
The Mortgage Interest Deduction allows homeowners to deduct the interest paid on their mortgage for their primary or secondary home. This deduction applies to loans up to $750,000 for mortgages taken after December 15, 2017, or up to $1 million for loans taken before that date. This tax benefit can significantly reduce your taxable income.
Excess Mortgage Rule
The Excess Mortgage Rule limits the amount of mortgage interest you can deduct if your mortgage exceeds $750,000 ($1 million if the mortgage was taken before December 15, 2017). Interest paid on the portion of the mortgage that exceeds these limits cannot be deducted.
Mortgage Interest Deduction Limits
|
Loan Origination Date |
Mortgage Deduction Limit |
Max Deductible Amount |
|
Before December 15, 2017 |
$1,000,000 |
Interest on up to $1 million of mortgage debt |
|
After December 15, 2017 |
$750,000 |
Interest on up to $750,000 of mortgage debt |
Frequently Asked Questions
1. What is the mortgage interest deduction limit for 2024?
For mortgages taken after December 15, 2017, the limit is $750,000. Mortgages before that date can have a deduction limit of up to $1 million.
2. Can I deduct mortgage interest for a second home?
Yes, you can deduct interest on your second home, as long as the total mortgage stays within the applicable limits.
3. What happens if my mortgage exceeds the limit?
Any interest paid on the portion of the mortgage that exceeds $750,000 (or $1 million for older loans) is considered excess and cannot be deducted.
4. How does refinancing affect mortgage interest deductions?
Refinancing can affect your mortgage interest deductions, especially if it increases your mortgage beyond the allowable limit.
5. Can I deduct interest on a home equity loan?
Yes, if the loan is used to buy, build, or improve your home, and the total mortgage debt doesn’t exceed $750,000 or $1,000,000, depending on the origination date.
If you have any questions about the Mortgage Interest Deduction or need assistance navigating your mortgage options, don’t hesitate to contact us. Our team is here to help you understand your eligibility and maximize your tax benefits. Reach out today!
