There are a lot of changes that have occurred with the deductibility of mortgage interest and many get confused. So we invited Kay Mukaigawa on the show for another edition of Living Akamai.  Kay invited Lisa Wells, who is her personal CPA on the show and the first topic of discussion of taking money out on a HELOC.

“The interest paid on a HELOC is tax deductible as long as you use the funds to purchase, repair, or make substantial improvements to the property secured by the loan. If you take out a HELOC on your primary home to renovate another home, then the interest won’t qualify as a deduction for the primary home.  However that doesn’t mean it isn’t deductible.  If the other home is an investment property, you may still be able to deduct the interest under the investment property.”

We also wanted Lisa to discuss mortgage interest and what other deductions can be made when purchasing a home.

“Mortgage interest on your primary home is deductible on your personal tax return form Schedule A. The deductible portion is limited up to $750,000 for single and married people.  Married separate statuses can deduct up to $375,000.  This means if you financed $1,MIL, 75% of your mortgage interest will be deductible, because 750,000 is 75% of $1,MIL.  You can claim mortgage interest on a second home too (that is not a rental property) on the same form, subject to the same total limit.  Other items that you deduct on your primary home are real estate tax, mortgage points paid at purchase or refi, and mortgage insurance (thru 2021, so far)”  

For more information or if you have any questions on what the two discussed, you can reach out to Lisa at (808) 725-2000. You can also visit evrealestate.com for information and dates on upcoming seminars.