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chuamj
New Member

Do I qualify for the Mortgage Interest Binding Contract Exception if I entered a binding contract before Dec 15 for Dec 27 closing which got delayed to Jan 18?

Under the new tax bill, the limitation on qualified mortgage interest deduction is reduced from $1,000,000 to $750,00 of indebtedness. However, the binding contract exception applies if a taxpayer enters into a binding written contract before December 15, 2017 to close on the purchase of a principal residence before January 1, 2018 and purchases such residence before April 1, 2018, " The conference agreement provides that a taxpayer who has entered into a binding written contract before December 15, 2017 to close on the purchase of a principal residence before January 1, 2018, and who purchases such residence before April 1, 2018, shall be considered to incurred acquisition indebtedness prior to December 15, 2017 under this provision".

I am trying to understand what the different dates mean, specifically January 1, 2017 and April 1, 2018 in the above context. For my case, I entered a binding contract on October 19, 2017 to close on a property on December 27, 2017. However, due to delays with the underwriting and survey, my closing date is now pushed to January 12, 2018. My understanding of the above text is that I should still qualify for the exception as my binding contract was entered into before December 15, 2017 for closing before January 1, 2018 and I eventually purchase the property before April 1, 2018. Is that interpretation accurate? 

2 Replies
TomYoung
Level 13

Do I qualify for the Mortgage Interest Binding Contract Exception if I entered a binding contract before Dec 15 for Dec 27 closing which got delayed to Jan 18?

I don't think anybody really knows.  They are all merely repeating the sentence you're quoted.  

At a guess your interpretation is correct.  Despite contracts that specify "such and such a date" for closing, problems can push the actual closing back.  I expect Congress - in its infinite wisdom - settled on 4/1/18 as a "reasonable" amount of time for such situations.
TaxGuyBill
Level 9

Do I qualify for the Mortgage Interest Binding Contract Exception if I entered a binding contract before Dec 15 for Dec 27 closing which got delayed to Jan 18?

Yes, that is how I interpret it also.

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