tax law - when does mortgage need to be entered to avoid $500k interest deduction cap?

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TinkerPDX
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tax law - when does mortgage need to be entered to avoid $500k interest deduction cap?

Post by TinkerPDX » Thu Nov 02, 2017 10:10 am

Can any of the tax pros out there tell us when the proposed tax law (if it passes) would be effective? We are just about to purchase a home with a mortgage over $500k. Plan was to execute 1/1/18 - can we still expedite and get within the "existing mortgage" exception to the proposed $500k cap?

The Wizard
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Re: tax law - when does mortgage need to be entered to avoid $500k interest deduction cap?

Post by The Wizard » Thu Nov 02, 2017 10:13 am

Pending legislation, no can do...
Attempted new signature...

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celia
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Re: tax law - when does mortgage need to be entered to avoid $500k interest deduction cap?

Post by celia » Thu Nov 02, 2017 10:17 am

This thread will soon be locked because of talking about proposed law, instead of current law.

But to answer your question, the amount of the mortgage, and the term of the mortgage, and the interest rate are all irrelevant. What can be currently deducted, on Schedule A, is how much interest you paid on your mortgage for the tax year. You need to have enough to itemize, else you should just take the standard deduction.

Congress is free to change the law at any time, and then it would only impact tax years from the effective date of the change and going forward.

It is also recommended to buy or not buy a house as a place where you can live, not because it will help your taxes.

markettracker
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Re: tax law - when does mortgage need to be entered to avoid $500k interest deduction cap?

Post by markettracker » Thu Nov 02, 2017 10:26 am

Would the proposed limit apply to the lifetime of the mortgage, or just while the amount is over the limit?

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HueyLD
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Re: tax law - when does mortgage need to be entered to avoid $500k interest deduction cap?

Post by HueyLD » Thu Nov 02, 2017 10:29 am

I am for the elimination of all itemized deductions.

Ace1
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Re: tax law - when does mortgage need to be entered to avoid $500k interest deduction cap?

Post by Ace1 » Thu Nov 02, 2017 11:02 am

Under current law, mortgage interest can only be deducted on mortgage debt of $1 million or less.

Rwsavory
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Re: tax law - when does mortgage need to be entered to avoid $500k interest deduction cap?

Post by Rwsavory » Thu Nov 02, 2017 11:04 am

It's not going to pass. You heard it here first. :beer

Jags4186
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Re: tax law - when does mortgage need to be entered to avoid $500k interest deduction cap?

Post by Jags4186 » Thu Nov 02, 2017 11:05 am

In before lock. They need 60 votes to pass this because it is deficit increasing. It will never pass.

Move along...

Perkunas
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Re: tax law - when does mortgage need to be entered to avoid $500k interest deduction cap?

Post by Perkunas » Thu Nov 02, 2017 12:06 pm

You'd likely be able to deduct the interest on the first $500k of mortgage; it is not an all-or-nothing deduction.

If you opened a mortgage of $1MM in 2018, you'd likely be able to deduct 50% of the interest, or 10/11ths of the interest on a $550k mtg.

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prudent
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Re: tax law - when does mortgage need to be entered to avoid $500k interest deduction cap?

Post by prudent » Thu Nov 02, 2017 12:08 pm

Topic is locked (speculation about future legislation, which is prohibited by forum policy). See: Unacceptable Topics.
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The whole point of the policy is to (1) eliminate contentious disagreements that result from these discussions and (2) keep investors from making bad decisions. Proposed regulations change many times between the time they're introduced and signed into law.

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