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pjcronin1975
New Member

I purchased a new primary residence in 2/18 and started renting my condo. My mortgage on my new residence >$750,000. How do I compute my home mortgage interest deduction?

 
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DDollar
Level 1

I purchased a new primary residence in 2/18 and started renting my condo. My mortgage on my new residence >$750,000. How do I compute my home mortgage interest deduction?

You can only deduct the interest on $750,000 of mortgage debt.  Lets say your average mortgage balance during 2018 was $1 million, and you paid $40,000 in interest.   You would be able to deduct 3/4 (750,000 / 1,000,000) of your interest or $30,000. 

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3 Replies
DDollar
Level 1

I purchased a new primary residence in 2/18 and started renting my condo. My mortgage on my new residence >$750,000. How do I compute my home mortgage interest deduction?

You can only deduct the interest on $750,000 of mortgage debt.  Lets say your average mortgage balance during 2018 was $1 million, and you paid $40,000 in interest.   You would be able to deduct 3/4 (750,000 / 1,000,000) of your interest or $30,000. 

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pjcronin1975
New Member

I purchased a new primary residence in 2/18 and started renting my condo. My mortgage on my new residence >$750,000. How do I compute my home mortgage interest deduction?

Thank you. For purposes of computing my average mortgage balance for my condo, do I add (1) the balance as of the date I started renting the condo or (2) the balance as of 12/31/18 to the balance as of 1/1/18 (and then divide by 2)?
DDollar
Level 1

I purchased a new primary residence in 2/18 and started renting my condo. My mortgage on my new residence >$750,000. How do I compute my home mortgage interest deduction?

Your condo does not factor in to the calculation if it is a rental.  The interest on your rental is a valid rental expense regardless of the amount.  Only your primary residence and, if applicable, a second home are factored in to the maximum mortgage interest deduction.
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