The tax law (TCJA) imposes a lower dollar limit on mortgages qualifying for the home-mortgage-interest deduction. Beginning in 2018 and until 2025, taxpayers may deduct interest of only $750,000 of qualified residence loans. This is down from the prior limits of $1 million. The limits apply to the combined amount of loans used to buy, build or substantially improve the taxpayer's main home and second home.
Additionally, the Tax Cuts and Jobs Act (TCJA) suspends from 2018 to 2025 the deduction for interest paid on home-equity loans and lines of credit, unless they are used to buy, build or substantially improve the taxpayer's home that secures the loan. The following examples illustrate these points.
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