Buying a new Home , what is the mortgage amount limit

I am looking to buy a new home with a 750k mortgage. I will also have a rental property with 72k in mortgage. will this have an impact or should i have a combined mortgage of 750K between both loans.

posted

There is a $750K limit on your "personal" mortgage. Basically that means you can only claim/deduct the interest paid on a maximum of $750K for a mortgage on personal property, such as your primary residence, 2nd home or vacation home. You could have a billion dollar mortgage on it. But you can only claim/deduct the interest on the first $750K of such a mortgage.

The rental property mortgage doesn't play into that. That mortgage is not a personal one. It's a business or investment mortgage. There is no limit for that. You could have a billion dollar mortgage on your rental property and every single penny of interest paid on that mortgage is deductible. That is, provided every penny of that mortgage is use the buy, build or improve that rental.