Mortgage debt over a million dollars strategies

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Mortgage interest on the combined debt for your main and second homes over $1,000,000 is not deductible as an itemized deduction.  Home equity debt is limited to $100,000.

Married filing separately returns have to reduce amounts by half: $500,000 and $50,000 respectively.

Strategies:

  • Any debt taken before 10/13/87 is exempt and doesn’t get added into the combined amounts.
  • The $100,000 home equity debt can be on top of the $1,000,000 amount for a total of $1,100,000.
  • If part of the home is used for business or rental purposes only the residential part of the debt is added into the combined amounts.

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