[quote=bearishgurl][quote=XBoxBoy]. . . for someone to save 20k off their tax bill wouldn’t that have to pay over 50k a year in interest? Does anyone think the average californian who’s paying a mortgage is paying over 50k a year in motgage interest?[/quote]
As far as I know XBoxBoy, mortgage interest is only deductible up to $25K per year. Folks who are paying more interest than that can only deduct $25K of it.
Any accountant geek-Piggs out there reading this please correct me if this law has changed.[/quote]
Nope. Purchase money debt is deductible, up to a $1 million in debt, without regards to the dollar amount of the interest. Million dollar loan at 18% fixed, interest only, you get a deduction of $180,000. There are some limitations on non-purchase money debt, but they’re all related to the debt, not the dollar amount of interest.
The only $25,000 limitation that comes to mind is for passive losses for investments with active participation, most commonly related to rental property losses.
