The US government has blessed us with the ability to deduct our mortgage interest expense from our income. This thereby enables us to lower our tax liability. The maximum mortgage tax deduction ultimately depends on income, which I’ll get into below.
Although you could deduct mortgage interest on up to $1 million in mortgage indebtedness in the past, that’s no longer the case. The amount was lowered to $750,000 due to the Tax Cut & Jobs Act passing in 2017 for 2018 and beyond.
While the decrease is unfortunate for property owners with large mortgages, at least we still have something. If you go to Canada, Australia, Asia, and Europe, there is no such mortgage tax deduction benefit. Then again, at least they’ve got cheap healthcare!
That said, mortgage rates have collapsed and many homeowners hav smartly been able to refinance their mortgages. If you haven’t taken advantage of record-low mortgage rates yet, get a free mortgage rate quote with Credible. Credible is one of the leading mortgage lending marketplaces where qualified lenders compete for your business.
I personally got a 7/1 ARM jumbo for only 2.125% and minimal fees. It’s crazy how low mortgage rates are today.
To understand the maximum mortgage tax deduction, we should first do an overview of the marginal income tax rates in America.