Trump's Tax Plan and How It Affects Your Mortgage Deduction
On December 22, 2017, President Trump (https://www.cnbc.com/2017/12/20/here-are-the-finalize.html) signed the Tax Cuts and Jobs Act (https://www.congress.gov/bill/115th-congress/house-bill/1/text) . The mortgage interest deduction being lowered will have no effect on most of the country but it will be costly for many people in states such as California and New York.
The good news is that anyone who purchased before December 15th 2017 are grandfathered for the first mortgage. The bad news is that the mortgage interest deduction on a Home Equity Line of Credit (HELOC) is not grandfathered and you will only be able to deduct the amount used for purchase (Acquisition) or home improvement -any amount used for debt consolidation is not deductible. So if you used $100,000 for home improvement and another $100,000 for debt consolidation, only the $100,000 home improvement interest will be deductible.
Here is a chart comparing how the Prior Tax Law to the New Tax Law for Mortgage Deduction, Taxes and Sale of Primary Residence:
Click Image to print