When can I deduct mortgage interest and property taxes?
Q. If I own my primary residence with no mortgage and then purchase a second home for personal enjoyment using a mortgage — not to rent — may I deduct the new mortgage? Can I deduct property taxes from both, one or none?
A. Congrats on the possible vacation home.
You can deduct mortgage interest on up to two homes.
Previously there was a limit of the interest on up to $1 million of mortgage debt, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.
“The Tax Cuts and Jobs Act of 2017 lowered this limit to $750,000 of mortgage debt,” Kiely said. “If you took out your mortgage prior to Dec. 16, 2017, your $1 million mortgage was grandfathered in.”
He said the $1 million/$750,000 mortgage debt limits do not apply to mortgages for rental properties.
Kiely said you can can deduct the real estate taxes on both houses.
“The Tax Cuts and Jobs Act of 2017 put a limit of $10,000 on the deduction of state and local tax deduction (SALT),” he said. “So the answer to your question is you can deduct the mortgage interest and property taxes subject to the new limits.”
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Karin Price Mueller writes the Bamboozled column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com’s weekly e-newsletter.