You may be thinking about refinancing this year to take advantage of falling interest rates. Or you may have refinanced your home mortgage last year and have yet to file your 2018 return (because you filed an extension). Either way, there are important federal income tax implications. Here’s what you need to know.
Deductions For Home Mortgage Interest
For federal income tax purposes, you can deduct interest on a mortgage that qualifies as home acquisition debt. In addition, you can deduct or amortize points paid to take out a mortgage that qualifies as home acquisition debt.
However, for 2018 through 2025, the Tax Cuts and Jobs Act (TCJA) reduced the amount that can be treated as tax-favored home acquisition debt to $750,000 (or $375,000 if you use married filing separately status).
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