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  1. #1
    Join Date
    Apr 2011
    Posts
    145

    Default Deductions for Home Acquisition Debt vs. Refinancing

    My question involves real estate located in the State of: CA

    If I took out a loan before Dec. 15, 2017 but refinanced after this date, am I limited to $1m or am I limited to $750k?

  2. #2
    Join Date
    Oct 2014
    Posts
    7,147

    Default Re: $750k Loan Deductible Limit

    Quote Quoting jyeh74
    View Post
    My question involves real estate located in the State of: CA

    What is the date where the loan is limited to $750k instead of $1m? If I took out a loan before this date but refinanced after this date, am I limited to $1m or am I limited to $750k?
    Limited for that purpose? If you are asking about the home mortgage interest deduction, the rule is explained in IRS Publication 936 as follows:

    Home acquisition debt limit.

    The total amount you (or your spouse if married filing a joint return) can treat as home acquisition debt on your main home and second home is limited based on when the debt is secured.

    • For debt secured after October 13, 1987, and prior to December 16, 2017, the limit is $1 million ($500,000 if married filing separately).
    • For debt secured after December 15, 2017, the limit is $750,000 ($375,000 if married filing separately).


    However, a taxpayer who enters into a written binding contract before December 15, 2017, to close on the purchase of a principal residence before January 1, 2018, and who purchases such residence before April 1, 2018, is considered to have incurred the home acquisition debt prior to December 16, 2017.

    The limits above are reduced (but not below zero) by the amount of your grandfathered debt (discussed later).

    If you refinance a loan that qualified as home acquisition debt then that loan (up to the amount of the old loan) will still qualify as home acquisition debt. So let's say you you had a home mortgage with a balance as of 1/10/2019 of $850,000 that had been taken out in 2015 and that qualified as home acquisition debt. You refinance that loan on 10/10/2019 for $850,000, the same balance as the old loan. The interest on that entire amount of that loan will still count for home mortgage interest deduction.

  3. #3
    Join Date
    Apr 2011
    Posts
    145

    Default Re: $750k Loan Deductible Limit

    For mortgage interest deduction. So it sounds like even though I refinanced last year, because my loan was originated before Dec 15, 2017, I’m still good upto the $1m limit not the new $750k limit.

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