As the previous article discussed on SALT deduction, this article will briefly discuss the impact to mortgage interest deduction and home equity loan interest deduction on individual tax return.
Under the reform, homeowners can only deduct mortgage interest on a home loan up to $750,000. Before the reform, mortgage interest can be deducted on a home loan up to $1 million. A taxpayer who entered a binding written contract before December 15, 2017 and close the purchase of a principle resident before Jan 1, 2018 are still allowed the prior-law $1 million limit.
For people who take out home equity loan to make renovation to their house or for other purposes, under the tax reform, the interest paid will no longer be deductible. Before the reform, home equity loan interest was deductible up to $10,000. However, in 2018, homeowners will not be able to deduct the interest on their tax returns.
For more information, please consult with your CPA.
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