Did you purchase a second residence, refinance an original loan, or take out a home equity loan in addition to a first mortgage? You can revisit the Mortgage Interest questionnaires for both loans to confirm whether all of the questions were answered correctly and whether a limitation was applied.
It is important to identify the loans correctly in order for TurboTax to determine whether to apply the limitation for total mortgage debt of $750,000.
Deductible mortgage interest is interest you pay on a loan, secured by a main home or second home, that was used to buy, build, or substantially improve the home. For tax years prior to 2018, the maximum amount of debt eligible for the deduction was $1 million. Beginning in 2018, the maximum amount of debt is limited to $750,000. Mortgages that existed as of December 15, 2017, will continue to receive the same tax treatment as under the old rules. Additionally, for tax years prior to 2018, the interest paid on up to $100,000 of home equity debt was also deductible raising the previous total to $1,100,000. Loans with deductible interest typically include:
- A mortgage to buy or build your home
- A second mortgage
- A line of credit
- A home equity loan
If the loan is not a secured debt on your home, it is considered a personal loan, and the interest you pay usually isn't deductible. Your home mortgage must be secured by your main home or a second home. You can't deduct interest on a mortgage for a third home, a fourth home, etc.
See this TurboTax tips article and this help article for more information.
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