Did you refinance your house during the real estate boom years? If you were one of the hundreds of thousands of people who experienced some windfalls from appreciation, then you might have a problem you don’t even know about…yet.
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The issue is the deductibility of your home mortgage.
There are three main issues:
- The $1 million limit
- Definition of acquisition indebtedness (which goes down as you pay your mortgage off)
- Qualifying residence definition
Then to make it even more confusing, home equity loans have even different rules.
In order to take the deduction for the mortgage interest on a home equity loan it must be:
- $100,000 or less
- Total must be less than the current fair market value of the property
Are you ready for the IRS audit that could be coming your way?