I'm confused about something that I'm hoping you guys can help explain.
I've heard that generally when you are buying a primary residence that the interest one only 1million dollars of your loan would be tax deductible. But I also hear that you can deduct an extra 100,000 some how. I guess I'm confused about that extra 100,000. Lets say I get a loan for 1.1million now. Is there anything that I have to do special to be able to deduct that extra 100k? Or do I do nothing and then come tax time just enter all the interest into the right box in turbotax? In other words do I have to call out somewhere or split out somewhere the extra 100k. Let me know if my question makes any sense.
Here is the tax code:
" Only for qualified residence interest that the property security the debt important in determining the tax treatment of the related interest expense. Qualified residence interest expense on up to $1 million ($500,000 for married filing separately) of home acquisition indebtedness plus up to $100,00 ($50,000 MFS) of home equity indebtedness is fully deductible for regular tax "
Basically you can take the interest that you are paying on the actual mortgage of your house up the $1million limitation of principle.
The additional has to do with home equity loans.
If you have a 1 million dollar mortgage- and a Home equity LOC for $100,000 mortgage interest on both is deductible as long as its your primary residence.
Hope this helps!
Thanks Natalie! I think I understand it now. That was very helpful.
Yes finally! Using my tax powers to help someone! :)
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