Mortgage interest tax deduction

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I am having some issues figuring out how the tax deduction for mortgage interest works. This is for California, USA

I have a home that I bought for $807,000, with 2 loans:

1. $645,600 at 4.5%


2. $80,700 at 6% (But only interest for the first 10 years)

I know that i claim interest paid, up to 500k of home value, as tax deduction.

How do I calculate that, when I have 2 loans, and my home value is over 500k?

Can I deduct the $483.84 I pay for the second loan, plus 64.9% (500,000-80,700)/645,600=0.64947 of the $2,421.00 interest I pay for the first loan, for a total tax deduction of 2,904.84 2,421.00+483.84?

united-states tax-deduction california home-loan

share|improve this question

edited 3 hours ago

yoozer8

1,7523921

asked 5 hours ago

Androme

1255

add a comment | 

up vote
3
down vote

favorite

I am having some issues figuring out how the tax deduction for mortgage interest works. This is for California, USA

I have a home that I bought for $807,000, with 2 loans:

1. $645,600 at 4.5%


2. $80,700 at 6% (But only interest for the first 10 years)

I know that i claim interest paid, up to 500k of home value, as tax deduction.

How do I calculate that, when I have 2 loans, and my home value is over 500k?

Can I deduct the $483.84 I pay for the second loan, plus 64.9% (500,000-80,700)/645,600=0.64947 of the $2,421.00 interest I pay for the first loan, for a total tax deduction of 2,904.84 2,421.00+483.84?

united-states tax-deduction california home-loan

share|improve this question

edited 3 hours ago

yoozer8

1,7523921

asked 5 hours ago

Androme

1255

add a comment | 

up vote
3
down vote

favorite

up vote
3
down vote

favorite

I am having some issues figuring out how the tax deduction for mortgage interest works. This is for California, USA

I have a home that I bought for $807,000, with 2 loans:

1. $645,600 at 4.5%


2. $80,700 at 6% (But only interest for the first 10 years)

I know that i claim interest paid, up to 500k of home value, as tax deduction.

How do I calculate that, when I have 2 loans, and my home value is over 500k?

Can I deduct the $483.84 I pay for the second loan, plus 64.9% (500,000-80,700)/645,600=0.64947 of the $2,421.00 interest I pay for the first loan, for a total tax deduction of 2,904.84 2,421.00+483.84?

united-states tax-deduction california home-loan

share|improve this question

edited 3 hours ago

yoozer8

1,7523921

asked 5 hours ago

Androme

1255

I am having some issues figuring out how the tax deduction for mortgage interest works. This is for California, USA

I have a home that I bought for $807,000, with 2 loans:

1. $645,600 at 4.5%


2. $80,700 at 6% (But only interest for the first 10 years)

I know that i claim interest paid, up to 500k of home value, as tax deduction.

How do I calculate that, when I have 2 loans, and my home value is over 500k?

Can I deduct the $483.84 I pay for the second loan, plus 64.9% (500,000-80,700)/645,600=0.64947 of the $2,421.00 interest I pay for the first loan, for a total tax deduction of 2,904.84 2,421.00+483.84?

united-states tax-deduction california home-loan

united-states tax-deduction california home-loan

share|improve this question

edited 3 hours ago

yoozer8

1,7523921

asked 5 hours ago

Androme

1255

share|improve this question

edited 3 hours ago

yoozer8

1,7523921

asked 5 hours ago

Androme

1255

share|improve this question

share|improve this question

edited 3 hours ago

yoozer8

1,7523921

edited 3 hours ago

yoozer8

1,7523921

edited 3 hours ago

yoozer8

1,7523921

1,7523921

asked 5 hours ago

Androme

1255

asked 5 hours ago

Androme

1255

asked 5 hours ago

Androme

1255

1255

add a comment | 

add a comment | 

1 Answer
1

active

oldest

votes

up vote
5
down vote



accepted

If you purchased your home on or after Dec 15, 2017, the limit is $750K. If the home was purchased prior to that, the limit stays at the previous limit of $1M (even if you refinance). In your case, your total mortgage value is $726,300 which is less than the limit regardless of when you purchased your home, meaning you can deduct the entire amount you pay in interest for those two loans.

To answer your question in the general sense, had your total mortgage been more than the limit, you simply calculate the decimal value of the allowed limit divided by your total balance, and multiply that by each loan's total interest for the year. For example, if your total mortgage value was $1.6M for a home purchased in 2018, then your ratio would be 750K/1.6M = 0.469 (you should round to 3 decimal places). Then exactly 46.9% of the interest you paid on each mortgage would be deductible (regardless of their individual interest rates or balances).

Note the "total mortgage" amount is the average mortgage balance throughout the year.

share|improve this answer

edited 37 mins ago

answered 2 hours ago

TTT

26.9k45382

• 
  
  
  

  
  

  
  
  
  
  
  

  
  Ok thank you, i though it was 500k until a few min ago :)
  – Androme
  2 hours ago
  

  
  
  
  


• 
  
  
  

  
  

  
  
  
  
  
  

  
  @Kevin - none of those. It's the average balance of the mortgage for the year. :) More info: taxmap.irs.gov/taxmap/pubs/p936-001.htm#TXMP60bf91fc
  – TTT
  42 mins ago
  
  

  
  
  
  


• 
  
  
  

  
  

  
  
  
  
  
  

  
  @Kevin - Thx. Good suggestion. Edited.
  – TTT
  36 mins ago
  

  
  
  
  


• 
  
  
  

  
  1
  

  
  
  
  
  
  

  
  A remarkably precise answer.
  – Fattie
  35 mins ago
  

  
  
  
  

add a comment | 

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1 Answer
1

active

oldest

votes

1 Answer
1

active

oldest

votes

active

oldest

votes

active

oldest

votes

up vote
5
down vote



accepted

If you purchased your home on or after Dec 15, 2017, the limit is $750K. If the home was purchased prior to that, the limit stays at the previous limit of $1M (even if you refinance). In your case, your total mortgage value is $726,300 which is less than the limit regardless of when you purchased your home, meaning you can deduct the entire amount you pay in interest for those two loans.

To answer your question in the general sense, had your total mortgage been more than the limit, you simply calculate the decimal value of the allowed limit divided by your total balance, and multiply that by each loan's total interest for the year. For example, if your total mortgage value was $1.6M for a home purchased in 2018, then your ratio would be 750K/1.6M = 0.469 (you should round to 3 decimal places). Then exactly 46.9% of the interest you paid on each mortgage would be deductible (regardless of their individual interest rates or balances).

Note the "total mortgage" amount is the average mortgage balance throughout the year.

share|improve this answer

edited 37 mins ago

answered 2 hours ago

TTT

26.9k45382

• 
  
  
  

  
  

  
  
  
  
  
  

  
  Ok thank you, i though it was 500k until a few min ago :)
  – Androme
  2 hours ago
  

  
  
  
  


• 
  
  
  

  
  

  
  
  
  
  
  

  
  @Kevin - none of those. It's the average balance of the mortgage for the year. :) More info: taxmap.irs.gov/taxmap/pubs/p936-001.htm#TXMP60bf91fc
  – TTT
  42 mins ago
  
  

  
  
  
  


• 
  
  
  

  
  

  
  
  
  
  
  

  
  @Kevin - Thx. Good suggestion. Edited.
  – TTT
  36 mins ago
  

  
  
  
  


• 
  
  
  

  
  1
  

  
  
  
  
  
  

  
  A remarkably precise answer.
  – Fattie
  35 mins ago
  

  
  
  
  

add a comment | 

up vote
5
down vote



accepted

If you purchased your home on or after Dec 15, 2017, the limit is $750K. If the home was purchased prior to that, the limit stays at the previous limit of $1M (even if you refinance). In your case, your total mortgage value is $726,300 which is less than the limit regardless of when you purchased your home, meaning you can deduct the entire amount you pay in interest for those two loans.

To answer your question in the general sense, had your total mortgage been more than the limit, you simply calculate the decimal value of the allowed limit divided by your total balance, and multiply that by each loan's total interest for the year. For example, if your total mortgage value was $1.6M for a home purchased in 2018, then your ratio would be 750K/1.6M = 0.469 (you should round to 3 decimal places). Then exactly 46.9% of the interest you paid on each mortgage would be deductible (regardless of their individual interest rates or balances).

Note the "total mortgage" amount is the average mortgage balance throughout the year.

share|improve this answer

edited 37 mins ago

answered 2 hours ago

TTT

26.9k45382

• 
  
  
  

  
  

  
  
  
  
  
  

  
  Ok thank you, i though it was 500k until a few min ago :)
  – Androme
  2 hours ago
  

  
  
  
  


• 
  
  
  

  
  

  
  
  
  
  
  

  
  @Kevin - none of those. It's the average balance of the mortgage for the year. :) More info: taxmap.irs.gov/taxmap/pubs/p936-001.htm#TXMP60bf91fc
  – TTT
  42 mins ago
  
  

  
  
  
  


• 
  
  
  

  
  

  
  
  
  
  
  

  
  @Kevin - Thx. Good suggestion. Edited.
  – TTT
  36 mins ago
  

  
  
  
  


• 
  
  
  

  
  1
  

  
  
  
  
  
  

  
  A remarkably precise answer.
  – Fattie
  35 mins ago
  

  
  
  
  

add a comment | 

up vote
5
down vote



accepted

up vote
5
down vote



accepted

If you purchased your home on or after Dec 15, 2017, the limit is $750K. If the home was purchased prior to that, the limit stays at the previous limit of $1M (even if you refinance). In your case, your total mortgage value is $726,300 which is less than the limit regardless of when you purchased your home, meaning you can deduct the entire amount you pay in interest for those two loans.

To answer your question in the general sense, had your total mortgage been more than the limit, you simply calculate the decimal value of the allowed limit divided by your total balance, and multiply that by each loan's total interest for the year. For example, if your total mortgage value was $1.6M for a home purchased in 2018, then your ratio would be 750K/1.6M = 0.469 (you should round to 3 decimal places). Then exactly 46.9% of the interest you paid on each mortgage would be deductible (regardless of their individual interest rates or balances).

Note the "total mortgage" amount is the average mortgage balance throughout the year.

share|improve this answer

edited 37 mins ago

answered 2 hours ago

TTT

26.9k45382

If you purchased your home on or after Dec 15, 2017, the limit is $750K. If the home was purchased prior to that, the limit stays at the previous limit of $1M (even if you refinance). In your case, your total mortgage value is $726,300 which is less than the limit regardless of when you purchased your home, meaning you can deduct the entire amount you pay in interest for those two loans.

To answer your question in the general sense, had your total mortgage been more than the limit, you simply calculate the decimal value of the allowed limit divided by your total balance, and multiply that by each loan's total interest for the year. For example, if your total mortgage value was $1.6M for a home purchased in 2018, then your ratio would be 750K/1.6M = 0.469 (you should round to 3 decimal places). Then exactly 46.9% of the interest you paid on each mortgage would be deductible (regardless of their individual interest rates or balances).

Note the "total mortgage" amount is the average mortgage balance throughout the year.

share|improve this answer

edited 37 mins ago

answered 2 hours ago

TTT

26.9k45382

share|improve this answer

share|improve this answer

edited 37 mins ago

edited 37 mins ago

edited 37 mins ago

answered 2 hours ago

TTT

26.9k45382

answered 2 hours ago

TTT

26.9k45382

answered 2 hours ago

TTT

26.9k45382

26.9k45382

• 
  
  
  

  
  

  
  
  
  
  
  

  
  Ok thank you, i though it was 500k until a few min ago :)
  – Androme
  2 hours ago
  

  
  
  
  


• 
  
  
  

  
  

  
  
  
  
  
  

  
  @Kevin - none of those. It's the average balance of the mortgage for the year. :) More info: taxmap.irs.gov/taxmap/pubs/p936-001.htm#TXMP60bf91fc
  – TTT
  42 mins ago
  
  

  
  
  
  


• 
  
  
  

  
  

  
  
  
  
  
  

  
  @Kevin - Thx. Good suggestion. Edited.
  – TTT
  36 mins ago
  

  
  
  
  


• 
  
  
  

  
  1
  

  
  
  
  
  
  

  
  A remarkably precise answer.
  – Fattie
  35 mins ago
  

  
  
  
  

add a comment | 

• 
  
  
  

  
  

  
  
  
  
  
  

  
  Ok thank you, i though it was 500k until a few min ago :)
  – Androme
  2 hours ago
  

  
  
  
  


• 
  
  
  

  
  

  
  
  
  
  
  

  
  @Kevin - none of those. It's the average balance of the mortgage for the year. :) More info: taxmap.irs.gov/taxmap/pubs/p936-001.htm#TXMP60bf91fc
  – TTT
  42 mins ago
  
  

  
  
  
  


• 
  
  
  

  
  

  
  
  
  
  
  

  
  @Kevin - Thx. Good suggestion. Edited.
  – TTT
  36 mins ago
  

  
  
  
  


• 
  
  
  

  
  1
  

  
  
  
  
  
  

  
  A remarkably precise answer.
  – Fattie
  35 mins ago
  

  
  
  
  

Ok thank you, i though it was 500k until a few min ago :)
– Androme
2 hours ago

Ok thank you, i though it was 500k until a few min ago :)
– Androme
2 hours ago

@Kevin - none of those. It's the average balance of the mortgage for the year. :) More info: taxmap.irs.gov/taxmap/pubs/p936-001.htm#TXMP60bf91fc
– TTT
42 mins ago

@Kevin - none of those. It's the average balance of the mortgage for the year. :) More info: taxmap.irs.gov/taxmap/pubs/p936-001.htm#TXMP60bf91fc
– TTT
42 mins ago

@Kevin - Thx. Good suggestion. Edited.
– TTT
36 mins ago

@Kevin - Thx. Good suggestion. Edited.
– TTT
36 mins ago

1

1

A remarkably precise answer.
– Fattie
35 mins ago

A remarkably precise answer.
– Fattie
35 mins ago

add a comment | 

 

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