Summary
- Home mortgage interest in your 2017 return will be treated as before ($1,000,000 limit on debt or $500,000 if married filing separate).
- Home mortgage interest on your 2018 return (and beyond) will be treated as before on any debt incurred on or before December 15, 2017, but for debt acquired after December 15, 2017, the new debt limits will apply.
Detail
The changes in the Tax Cut and Jobs Act, passed in late 2017, for the most part take effect on January 1, 2018. This means that the changes described in the bill will generally apply to your 2018 tax return, which you will file in April of 2019.
The return you are filing now (until April 15, 2018) covers January 1, 2017 to December 31, 2017 and is referred to as your 2017 tax return. Therefore, changes described in the tax bill will generally not apply to your 2017 return (there are exceptions) .
In terms of your specific question how refinance interest changes are handled, section 11043 of the tax bill (see link below) specifically says
“11 (b) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 2017.”
This means that how you treat this interest on your 2017 return remains as before; the tax bill changes will affect only your 2018 (and future) tax returns.
Note that your pre-existing debt is mostly grandfathered (see section 11043 (a)(F)((i)(III) below; that is, any acquisition debt (your mortgage(s) on your home) incurred on or before December 15, 2017 will continue to be subject to the old limits of $1,000,000 ($500,000 if married filing separate) in tax years 2018 and beyond.
Click here for the text of the final bill.
