We’re getting questions about refinancing and deductions for mortgage interest. Let us refresh you on the rules and more specifically, how interest on refinanced mortgages work.
First the rules:
You can deduct mortgage interest on up to $750k of outstanding principal. Meaning that if you have a $1m mortgage, interest is only deductible up to $750k.
There is an exception:
If your mortgage was taken out before December 16, 2017, interest is deductible on a mortgage up to $1m. Meaning that if your mortgage was in place before that date, and you had a $1M mortgage, interest is 100% deductible.
Now for refinancing and you'll be happy to hear this:
If you refinance a mortgage originally taken out before December 16, 2017, interest on the new refinanced mortgage remains deductible up to $1m of principal. So if you had a mortgage taken out before that date with an outstanding balance of $1m, and refinanced today for $1m, interest remains 100% deductible.
If you refinance a mortgage taken out after that date, interest is deductible up to $750k of outstanding principal.
If you have any questions, feel free to reach out to our team.