Can you deduct mortgage interest in 2018? This is a common question among homeowners, especially those who are looking to save on their taxes. Understanding the rules and regulations surrounding mortgage interest deductions can help you maximize your tax savings. In this article, we will delve into the details of mortgage interest deductions for the tax year 2018.
Mortgage interest deductions have been a significant tax benefit for homeowners for many years. However, the rules surrounding these deductions have changed over time, and it’s essential to stay informed about the current regulations. For the tax year 2018, the IRS allows homeowners to deduct mortgage interest on certain types of loans, but there are specific criteria that must be met.
Firstly, the mortgage must be a secured loan used to buy, build, or substantially improve your main home or a second home. This means that you can deduct the interest on a primary residence, a vacation home, or a rental property you own and live in for at least 14 days a year. The loan must also be in your name or in the name of your spouse, and it cannot exceed $750,000 for loans taken out after December 15, 2017.
For loans taken out before December 15, 2017, the deduction limit is $1 million. This means that if you have an older mortgage, you may still be eligible for a larger deduction. However, for loans taken out after that date, the deduction limit is reduced to $750,000. It’s important to note that this limit applies to the total amount of all mortgages on your property, not just the mortgage on your primary residence.
Additionally, the interest deduction is subject to the overall limit on itemized deductions. For the tax year 2018, the standard deduction is $12,000 for single filers and $24,000 for married couples filing jointly. If your itemized deductions, including mortgage interest, are less than these amounts, it may be more beneficial to take the standard deduction instead.
Lastly, it’s worth mentioning that you can only deduct mortgage interest on the first $100,000 of home equity debt. This means that if you have a home equity loan or line of credit, you can only deduct the interest on the first $100,000 of the loan. Any additional interest paid on home equity debt is not deductible.
In conclusion, if you are a homeowner and have a mortgage on your primary residence or second home, you may be eligible to deduct mortgage interest on your 2018 taxes. However, it’s crucial to understand the specific rules and limitations surrounding these deductions to ensure you maximize your tax savings. Always consult with a tax professional or financial advisor to get personalized advice for your situation.
