By Jeffrey R. Wolfe, Senior Vice President, Manager of Wealth Planning StrategiesPrint This Post
As part of the Tax Cuts and Jobs Act (“Act”), the ability to deduct mortgage interest was one of the few deductions left standing. However, the deduction did take a few hits. Under the Act, interest on newly acquired mortgages is only deductible up to $750,000 of acquisition debt (versus the previous $1 million threshold). The Act did carve out an exception for people who were under contract to buy a home before Dec. 15, 2017, as long as they were scheduled to close by Jan. 1, 2018. The Act also left the ability to deduct interest on a mortgage of a second home, but the total combined loan value between your primary home and your secondary home is limited to the $750,000 threshold.
Another new wrinkle is that interest on home equity loans is no longer deductible for current or future home equity loans. Therefore, the appeal of home equity loans to use the cash to pay other expenses, like tuition for example, may be lost with the new tax rules.
Benjamin F. Edwards & Co. does not provide tax advice, therefore it is also important to consult with your tax professional for additional guidance tailored to your specific situation.