Interest dedution limits on a refiance on a loan t...
Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Announcements
TurboTax has you covered during Covid. Get the latest stimulus info here.
cancel
Showing results for 
Search instead for 
Did you mean: 
GrigsbyR59
New Member

Interest dedution limits on a refiance on a loan that was started 7 years ago.

I am thinking of refinancing my home loan (which I last refinanced 7 years ago). If I do this, will I be limited to the $750K interest deduction limits or will it stay at $1,000,000 in 2021?

2 Replies
JohnB5677
Employee Tax Expert

Interest dedution limits on a refiance on a loan that was started 7 years ago.

For 2021, the limit is the mortgage interest paid on the first $750,000 of indebtedness for a married couple or $375,000 if single or married filing separately.

 

However, tax law do change quickly these days.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
NCperson
Level 15

Interest dedution limits on a refiance on a loan that was started 7 years ago.

the rule is based on the date the loan was taken out.....so you are limited to $750,000 for full interest deduction. 

 

however, over time, all the interest will become deductible as the loan amortizes.

 

the IRS assumes that the part over $750,000 is what amortizes first so what is deductible is  $750,000 / loan balance * interest.   That percent will continue to increase towards 100% as the 'loan balance' decreases towards $750,000.

Dynamic AdsDynamic Ads
v
Privacy Settings