For mortgages taken out after December 15, 2017, what is the maximum amount of debt eligible for interest deduction?

The maximum amount of debt eligible for interest deduction on mortgages taken out after December 15, 2017, is indeed $750,000. This limit applies to mortgages for primary and secondary residences. Prior to the Tax Cuts and Jobs Act (TCJA), taxpayers could deduct interest on mortgage debt up to $1,000,000 for primary residences and up to $100,000 for home equity lines of credit. However, with the enactment of the TCJA, the threshold for new mortgages was reduced to $750,000, establishing the current limit for interest deductions for most taxpayers.

Understanding this change is crucial for taxpayers and tax preparers alike, as it impacts the deductions available and the overall taxable income calculation. The adjustments made by the TCJA are meant to target higher-value home loans while simplifying the tax code for the average homeowner. Therefore, recognizing this maximum limit helps in accurately preparing tax returns and advising clients on their potential deductions.