Owners of northern Virginia real estate, please be aware: The IRS currently has a $1.1 million limit on mortgage interest deduction. A recent U.S. Tax Court ruling upholds the IRS’ position that this deduction applies per residence and not per taxpayer. Many taxpayers of higher end homes were hoping for a different result.
As it stands, married homeowners, filing jointly or separately, may only deduct up to $1,000,000 of acquisition debt, and up to $100,000 of home equity debt. Homeowners filing separately may not each deduct the full amount, but half of the total.
This stipulation was contested by two unmarried individual, who as joint tenants owning a home felt that they were each entitled to deduct the full $1.1 million. The case made its way to the U.S. Tax Court, who upheld the IRS’requirements of only allowing the total deduction per residence and not per taxpayer, even if the homeowners were unmarried.
This tax situation affects only a few homeowners. However, if you are concerned that this new ruling may apply to you, or if you are in the process of buying a higher end northern Virginia real estate, it is a good idea to consult with your tax professional.
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