Guys, I need some help! The new tax bill went from $1 million mortgage deduction to $750k. Here is my situation: I live in California. Bought a house with my parents in 2015 with $590k mortgage. I plan to buy another house with my future husband next year. Does that mean for the new house I will only get (750-590)=$160k deduction? Also, for me it's 2nd house but for my fiance, it's his 1st house. How would that work? Can you help me understand? I read multiple sources but no articles mentioned about my special situation. Thanks so much!!!
One thing is, earlier mortgage deductions were allowed upto $1Million, now that's $750k. So that would be a change, and if you hit AMT then you anyways phase out property tax deduction
Is it clear in the new tax bill that the MID limit will apply per-couple vs per-person? I believe a court case in 2016 made it per-person, but the exact language in this new tax plan could obviously overrule the court ruling.
are these Tax changes final ? and from when it is effective?
Trump already signed it today.
You can’t deduct any interest is it’s a rental. You can’t call it a second home if you rent it for more than 14 days.
Not sure why people still call this a tax cut when deduction limits go down.
It’s only not a tax cut for millionaires in California. For everyone else it is 😂
Housing is more expensive, everything is more expensive. Incomes, taxes on those incomes which finance red states, etc. Why target those "rich people" and not the ones getting an estate tax cut? Oh right because they didn't vote for Trump.
This was always the case. You used to have $1M for both houses before the tax plan. Now you have $750K for both houses for new purchases. Remember though, the existing mortgage is grandfathered. So if you had a 900 mortgage you would still be able to deduct it.
Hey thanks! This sorta answered my question. So the $750k is for BOTH houses combined, not one. Am I correct? (If both means I can deduct $1 million + $750k) And even though my first house was before 2017, it's still $750k?
The total loan amount on which you could deduct interest last year was $1M across both your primary and secondary homes. So if you owned two houses and had a $600K loan on the first and a $700K loan on the second, you could deduct interest on 600/600 on one and 400/700 on the second. Now, that limit is 750K for all new mortgages issued post 1/1/2018. So yes, you can not deduct much if you buy a second house. Why do you want both houses? Note that if you rent your old house, then you aren't affected by this. You don't deduct mortgage interest directly on a rental property, it just counts an operating expense. So if you rent your old house, you can still deduct up to 750K on the new one. Lastly if you don't get married you can both continue to deduct 750K each on each house. But if you're married you only get 750K as a couple. You should talk to a CPA to get details.
You are very rich, madame!
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Pretty much, and it is a deduction on the interest charges on the loan, so a deduction of closer to probably 20k-25k given loan rates. You also lost the ability to deduct your property taxes past 10k, as well as the ability to deduct your state taxes.