Regier Carr & Monroe LLP CPAs logo

 

4801 East Broadway Blvd, Suite 501

Tucson, AZ 85711

 

Phone: 520-624-8229

 

Website: rcmtucson.com

Website: rcmllp.com

 

FacebookTwitterLinkedIn

August 2021

Deduct Mortgage Interest

Home For Sale Real Estate Sign and Beautiful New House.

Buying a house in this red-hot housing market comes with tax perks for those who itemize deductions.


KNOW YOUR LIMITS
The interest you pay on the first $750,000 of acquisition debt is tax deductible. Acquisition debt is any debt used to acquire, construct or substantially improve a residence and is secured by the home.


Interest on acquisition debt for a second home may also qualify depending on whether you rent it out. If you rent your second home, you’ll also need to use it yourself. If you don’t use the home, it’ll be considered rental property with a different tax treatment. The rental property mortgage interest deduction also offers significant tax benefits.


LOOK AT THE DETAILS
If you take out a home equity loan, the interest may be deductible. You’ll have to look at the details of how the loan proceeds were used.


Suppose the proceeds were used to improve the house by remodeling the kitchen. In that case, the interest paid on the loan is deductible so long as the principal amount of the home equity loan and any other acquisition debt is below the $750,000 threshold.


But if you used the home equity loan to pay off student loans, for example, the interest isn’t deductible. Your tax professional can provide guidance for your situation.


SUBSCRIBE

Enter your Name and Email address to get
the newsletter delivered to your inbox.

Please include name of person that directed you to my online newsletter so I can thank them personally.


CONTACT US

Enter your Name, Email Address and a short message. We'll respond to you as soon as possible.

The information and opinions contained in this web site are obtained from sources believed to be reliable, but their accuracy cannot be guaranteed. The publishers assume no responsibility for errors and omissions or for any damages resulting from the use of the published information. This web site is published with the understanding that it does not render legal, accounting, financial, or other professional advice. Whole or partial reproduction of this web site is forbidden without the written permission of the publisher.