For acquisition debt for a qualified personal residence incurred before 12/15/2017, the $1M limit applies as long as you don't refi for more money than you owed just before the refi.
However the you only get the deduction higher limit until the original mortgage would have ended. I.e. you can't extend the term and get the higher limit. That would only seem to matter until 2025.
Here's the detailed logic supporting that statement.
The law about deduction of mortgage interest is 26 U.S.C. 163(h)(3) ... https://www.law.cornell.edu/uscode/text/26/163
- 163(a) says you can deduct all interest unless there is an exception below.
- 163(h) says you can NOT deduct any interest for personal interest
- 163(h)(2)(D) says "qualified residence interest" is not personal interest
- 163(h)(3)(A)(i) defines "qualified residence interest" to include acquisition debt for a qualified residence
- 163(h)(B)(i) defines "acquisition" debt to mean debt used to acquire or substantially improve a qualified residence, which is secured by the residence.
It also says the critical thing:
Such term also includes any indebtedness secured by such residence resulting from the refinancing of indebtedness meeting the requirements of the preceding sentence (or this sentence); but only to the extent the amount of the indebtedness resulting from such refinancing does not exceed the amount of the refinanced indebtedness.
So a refi of acquisition debt is still acquisition debt as long as you don't take out more than you owe. (I thought I that the loan time couldn't also be extended but that is not in the statute.)
- 163(h)(3)(B)(ii) has the $1M limit.
- 163(h)(3)(F) has the special rule for 2018 through 2015.
- 163(h)(3)(F)(i)(II) says make the limit $750k not $1M.
- 163(h)(3)(F)(i)(III) says for debt "incurred on or before 12/15/2017" the (F)(II) $750k limit change shall not apply.
- 163(h)(3)(F)(iii)(I) says the purposes of the deduction limit the date of a refi is deemed to be the date of the original mortgage.
- 163(h)(3)(F)(iii)(I) says however that you can only get the higher limit for the original mortgage term (i.e. if the refi extends the term you will get the lower limit once the original term would have been over). That would seem to not matter once the $1M limit comes back in 2026. If it does.
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