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gavanzino72
New Member

When entering my mortgage interest then my amount owed goes way down and when i select it was refinanced and not the original loan, my amount owed goes back up, why?

 
1 Reply
maglib
Level 10

When entering my mortgage interest then my amount owed goes way down and when i select it was refinanced and not the original loan, my amount owed goes back up, why?

You need to go through the whole interview as until you define the amount refinanced it is assuming it was not deductible.

Under the prior law (which applies to the 2017 and prior), homeowners could deduct mortgage interest paid on acquisition indebtedness up to $1,000,000 ($500,000 for married filing separately status), plus interest paid on home equity indebtedness up to $100,000. Interest on that home equity indebtedness was deductible (up to $100K) no matter the use of the debt proceeds as long as all home-related debt does not exceed the fair market value of the qualified residence which secures the debt. If the acquisition indebtedness was incurred before December 15, 2017, taxpayers will still be able to deduct the interest on up to $1,000,000 of qualified debt. (The bill also makes an exception to this limit for individuals who had signed binding contracts before December 15, 2017 to buy homes and closed shortly thereafter.)

Two major changes came for 2018  mortgage interest deduction to prior tax policy with regard to mortgage interest: (1) reducing the limit on acquisition indebtedness to $750,000 ($375,000 for married filing separately); and (2) suspending the deduction for interest on home equity indebtedness (depending on the use of those funds, they are only deductible to extent used for to build or improve the home). Remember that if your home equity loan was used to buy or improve your first or second home, the interest will still be deductible in 2018 if your total home debt is within the limits based on when the debt was incurred.

So go through the interview to determine if the refinance fell within the rules for deductability.
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