Latest posts by Sandy Botkin (see all)
- Get a decent refund? Here are some tips on putting that money to work for you. - July 22, 2020
- Claiming Medical Expenses for Tuition - May 19, 2020
- Making Capital Gains Taxes Disappear on a Profitable Home Sale - May 4, 2020
There seems to be a lot of confusion about deducting home mortgage interest and there are traps that MANY people don’t know.
Home mortgage interest is deductible IF:
- It is use to either acquire or improve your principal residence or a second home (only 1). Thus, if you refinance your home, only the original acquisition debt qualifies as home mortgage interest. Any other extra debt incurred is NOT home mortgage interest.
- The debt must be on the home that you are acquiring or improving. Thus, your debt doesn’t qualify if you use it on your primary residence to buy a second home.
- This is surprising: there is a limit of $1,000,000 of home mortgage debt that you can deduct the interest on. In addition, you can get an extra $100,000 of debt for “home equity,” which can be used for any purpose. Thus, the total amount of indebtedness where you can deduct interest will be limited to $1.1 million.