Mortgage Interest Deductions – The New US Tax Law
Source: Angloinfo Global
Sweeping tax reform was signed into law by President Trump on December 22. The new tax law carries the official title “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018.” Since that is a complete mouthful (and then some), this blog post refers to the law by its former and commonly used name: The “Tax Cuts and Job Act.” (“Act”).
I’ve had numerous calls on the question whether US persons living abroad having mortgage loans secured by their foreign residence can still deduct mortgage interest. Yes, mortgage interest is still deductible under the new rules, but more strictly curtailed. Here’s everything you need to know.
Under pre-Act law, a taxpayer could take an itemized deduction for so-called “qualified residence interest”. Generally, this is interest paid on a mortgage secured by what the tax law calls a “qualified residence”. A “qualified residence” is a principal residence (e.g., the taxpayer’s primary home) and one other residence owned and used by the taxpayer as a residence (think, vacation home). These rules remain the same under the new law, and it does not matter whether the residence is located in the United States or overseas.