Currently, home owners are able to deduct interest on a loan or loans totaling $1 million plus interest on a home equity loan for a primary or second home of up to $100,000 for a grand total of a $1.1 million deduction in home loans each year. The $1.1 million mortgage interest deduction limit does already apply to a married couple who own a home or homes and files a joint tax return.
Although, the tax loop hole allowed unmarried couples who co-own one or more properties to file separately and take the full deduction of up to $1.1 million each. Now instead of each owner being entitled to the full deduction, the mortgage interest deduction will now be split.
For example, if you are unmarried and own one or more properties in California and file separately you will now only be allowed to deduct the interest up to $1.1 million. The additional mortgage interest is not deductible even if you borrow more than $1.1 million.
If you are unmarried and want to purchase an expensive home together you will want to calculate this new tax mortgage deduction limitation when determining how much you can spend.
Information Courtesy of Inman News