– Homes sold before April 1, 2018 are still eligible for the $1 million limit – if there was a binding contract signed before December 15, 2017, which was closed before January 1, 2018, and the home has was purchased before April 1, 2018.
What is considered mortgage interest?
What is considered deductible mortgage interest includes the following:
Interest on your primary residence mortgage. Your primary residence can include an apartment, condo, house, mobile home, co-op, and houseboat. Properties that are not considered your primary residence are properties that lack basic living accommodations, such as a bathroom, kitchen, and sleeping facilities. Additionally, the property must be listed as collateral for the loan from which you deduct interest payments. This also applies if you have a mortgage to buy out half of the property from an ex-spouse following a divorce.
Interest on the mortgage of a secondary residence. As long as your second home is listed as security for this mortgage, you can use the mortgage interest deduction on a mortgage for a home that is not your primary residence. If you rent out your second home, however, you must live there for more than 14 days, more than 10% of the days you rent it, or whichever is longer. You can only deduct interest on a home if you have more than one secondary residence.
Mortgage points you paid. You may have the option of paying mortgage points when you take out a mortgage, which means you can pay some of the interest on your loan up front. Points typically cost around 1% of your mortgage amount and can get you around 25% off your mortgage rate. To qualify for the deduction, the mortgage points must be paid at closing and directly to the lender. In some cases, mortgage points may be deducted in the year they are paid.