That’s because their standard deduction is $24,800 for 2020 and $25,100 for 2021. In addition, Congress imposed new limits on the amount of mortgage debt that new purchasers can deduct interest on. The upshot is that about 15 million filers likely deducted home mortgage interest in 2019 vs.
Can you write off PMI on your taxes?
Yes, through tax year 2020, private mortgage insurance (PMI) premiums are deductible as part of the mortgage interest deduction. The PMI deduction had expired at the end of 2017, but has been extended through the 2020 tax year. It is not clear yet whether it will be extended for tax year 2021.
Are there new limits on mortgage interest deductions?
New limits on home mortgage interest deductions. For 2018-2025, the TCJA generally allows you to deduct interest on up to $750,000 of mortgage debt incurred to buy or improve a first or second residence (so-called home acquisition debt).
How does the new tax law affect mortgages?
Under the new law, you are far less likely to itemize because a very large mortgage deduction may now be gone, combined with the fact that you likely will need more itemized deductions in total just to reach the higher standard deduction.
Are there any new tax deductions for home equity loans?
The new tax law also eliminates the unlimited interest deduction for both new and existing home equity loans. Homeowners used to be able to deduct interest for loans taken out for any purpose, such as debt consolidation or travel. Now, only interest on home equity loans used to make home improvements are eligible for a deduction.
Can you deduct grandfathered mortgage interest on your taxes?
Grandfathered debt isn’t limited. All of the interest you paid on grandfathered debt is fully deductible home mortgage interest. However, the amount of your grandfathered debt reduces the $1 million limit for home acquisition debt and the limit based on your home’s fair market value for home equity debt.
