Knowing that the deductible max has been reduced from $1MM to $750K, you are concerned that if you refinance one of two things might happen: If I refinance will I lose my mortgage interest deduction altogether? If I refinance, will my mortgage interest deduction be reduced from $1MM to $750K? Which is correct? Well, we need more information.
With the real estate market in the slump and interest rates falling, many people are refinancing their homes or buying new ones at bargain prices. If you have.
In addition to giving you the money you need to buy your house, mortgages have another key benefit — they generate valuable tax deductions from the interest that you pay on them. The deduction saves.
What the new tax law will do to your mortgage interest deduction. balance of the old loan at the time of the refinancing.. tax purposes, he can also deduct all the HELOC interest under the.
In general, the same tax deductions are available when you’re refinancing a mortgage as when you’re taking out a mortgage to buy a home. When refinancing a mortgage to get a lower interest rate or obtain more favorable loan terms, you’re really just taking out a new loan and using the money to pay off your existing home loan.
To the extent that the taxpayer itemizes their deductions – for which the mortgage interest deduction itself often pushes them over the line to itemize – the mortgage interest is deductible as well. Since the Tax Reform Act of 1986, the mortgage deduction had a limit of only deducting the interest on the first $1,000,000 of debt principal.
The mortgage interest deduction is just one of the many concepts revised by the new tax legislation. The rules are complicated; if you have questions about the mortgage interest deduction, or other tax law changes, please contact Kelly Pelletier, Donna Ryan, or your BNN advisor at 1.800.244.7444.
· Generally, these points serve as a deduction over the life of the loan, which means you deduct a small portion of the amount you paid each year. However, if you used the money from your refinance in order to improve your home, you might be able to deduct a portion or all of the points at once.