The Federal law limited the mortgage interest deduction acquisition debt maximum from $1,000,000 ($500,000 for married filing separately) to $750,000 ($375,000 for married filing separately). California does not conform to the Federal law.
If your mortgage acquisition debt exceeds $1,000,000 ($500,000 for married filing separately) to $750,000 ($375,000 for married filing separately). your mortgage interest was reduced on your Federal return.
You would calculate the adjustment subtract the mortgage interests reported on the Schedule A from the mortgage interest reported on the Form 1098 from the mortgage lender.
What does "exceeds $1,000,000 ($500,000 for married filing separately) to $750,000" mean? Could you elaborate more?
What's the difference when the loan exceeds 1000000 vs when the loan exceeds 750000 but under 1000000?
The limit on the amount of interest has changed under the Tax Cuts & Jobs Act. The interest deduction pre-TCJA has been available to qualified mortgage debt up to $1 million ($500,000 married filing separately).
Through 2025, the TCJA has lowered the amount of qualified mortgage debt to $750,000. For qualified mortgage debt incurred on or before December 15, 2017, the $1 million limit remains in place, thus "grandfathering" existing mortgage debt.
How do I calculate this with the following information?
House A purchased in 2015 with an initial mortgage balance of ~$500,000
House B purchased in 2019 with a mortgage balance of ~$1,000,000. House A turned into rental property 1/2 way through the year.
Is all of the mortgage interest from House A deductible and then the first $750,000 of House B (since purchased 2018 or later)?
Or is all of the mortgage interest from House A deductible and then the first $250,000 from House B?