Back in November I wrote about the proposed change to the mortgage interest deduction that was part of the tax reform legislation that was pending in Congress. The proposal was to reduce the ceiling for home acquisition debt for which the interest is deductible from $1 million to $500,000.
So what happened? The ceiling was reduced, but not as much as was proposed. The new ceiling is $750,000 ($375,000 for married filing separately).
Another limitation was imposed, however, in that the deductibility of interest on home equity loans has been suspended. Under existing law you could deduct the interest on home equity loans up to an amount borrowed of up to $100,000.
What about existing home acquisition loans that are over the limit? You don’t lose any deduction on those. The new lower limit doesn’t apply to any acquisition indebtedness incurred before December 15, 2017.
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