Music, hello and welcome to Personal Finance 101, a video series. It aims to help you take control of your personal finances. I'm Madeline Johnson, an editor here at Zach's, and today I want to talk about a widely used and lucrative tax deduction for homeowners called the mortgage interest deduction. This itemized deduction underwent some changes after the Tax Cuts and Jobs Act went into effect. Why is it so popular? Well, the mortgage interest deduction lets homeowners deduct the interest they pay on any loan used to build, purchase, or make improvements upon their residence. Pretty nice, right? Under the new bill, homeowners who bought a house before December 15th, 2017, will still be able to deduct the interest they pay on mortgage debt of up to $1 million. But for home purchases after this date, the cap has been lowered to $750,000, and it applies only to the mortgage on your primary residence or second home, not an investment property. So, if you own a vacation home or qualifying boat, camper, or RV, you will no longer be able to deduct the interest you pay on your loan. Something to note is that if you rent out your vacation home, even for only part of the year, you can still write off those costs. Here's the potentially bad news for some taxpayers. Because mortgage interest is still an itemized deduction, your itemized deductions must be greater than the standard deduction in order for it to make sense to use. The new tax law doubled the standard deduction for individuals and married couples. This will likely result in fewer people being able to utilize the deduction. Like many of the tax changes that affect individuals, the mortgage interest changes are set to expire, reverting back to $1 million after the 2025 tax...
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Mortgage interest deduction limit 2023-2024 Form: What You Should Know
Mortgage Interest Deduction: A Guide — IRS If you are planning to borrow to buy a home, you might qualify for the M1 or M2 deduction. Tax Deduction for Home Purchase Credit — Tax Guides The home acquisition credit can be used for a purchase that is not on real estate but is related to the purchase of a new home. It also can be used for a qualifying renovation of and other improvements to the home.
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