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How much do you get back on taxes for a mortgage?
As of 2017, everything was different due to the Tax Cuts and Jobs Act (TCJA). For new mortgages, the law capped the debt on which interest could be deducted at $750,000, down from $1 million
One of the most popular tax deductions in the United States is the mortgage interest deduction (HMID). It is highly regarded among real estate agents, homeowners, would-be homeowners, and even accountants. Unfortunately, the myth is frequently more appealing than the fact.
What to focus on when claiming your tax deduction
- Homeowners who itemize their taxes are eligible to deduct the interest they pay on a mortgage loan of up to $750,000.
- The 2017 Tax Cuts and Jobs Act (TCJA) lowered the cap on home loan principle for which interest may be deducted from $1 million to $750,000.
- Also, the TCJA dramatically quadrupled basic deductions, so fewer people will need to itemize in 2018.
- As a result, the vast majority of homeowners now get no compensation.
What changed in 2017 for your tax deduction
As of 2017, everything was different due to the Tax Cuts and Jobs Act (TCJA). For new mortgages, the law capped the debt on which interest could be deducted at $750,000, down from $1 million. In addition, when Congress did away with the personal exemption, it almost quadrupled the standard deduction, making it unnecessary for many taxpayers to itemize. Previously, they could claim the personal exemption in addition to whatever itemized deductions they claimed.
For the first year after the TCJA went into effect, around 135.2 million taxpayers were anticipated to use the standard deduction. In contrast, it was predicted that 20.4% of taxpayers would itemize, with 16.46% of those filing to deduct mortgage interest paid.
Suppose the sum of all your itemized deductions is less than the amount you are entitled to as a standard deduction. In that case, it may be prudent to forego the mortgage interest deduction in favor of taking the standard deduction. The following are the percentages used in the standard deduction:
- For the tax year 2022, the standard deduction for single and married filing separately filers is $12,950.
- For the tax year 2022, the standard deduction for married couples filing together is $25,900; for eligible widows (er)s, the standard deduction is $15,900.
- Twenty-two-year-old household heads will get $19,400 in 2022.