Question

Mortgage originated on $500,000 mortgage in 2006. 2019 we demolished house rebuilt, same land. Old mortgage rolled into current mortgage. Are we caped at $750k?

Forum|Forum|5 years ago
March 6, 2021
1 reply
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Hi, I understand the TCJA caps the loan amount on mortgage interest deductions at $750k loan amount on new mortgages. My situation is my wife and I have a mortgage on our primary and only home at $1,050,000 but it originated on a $500,000 mortgage loan that began in 2006. In 2019 we demolished our house and rebuilt on the same land. The previous mortgage was rolled into our construction loan which than converted into our current mortgage. Are we caped at $750k or $1m loan amount? Thanks.

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DaveF1006

it depends. It sounds like your new loan is a continuation of your old loan, with modifications. You can report that your loan originated in 2006 and report the new loan balance. in this situation, your cap will be $1.05M. Please refer to IRS publication 936 for more information.

[Edited 03-07-2021|2:17 PM PST

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