What You Need to Know About the $750,000 Mortgage Interest Deduction Limit for Loans Issued After December 15, 2017.

Outline

• Hook: Why mortgage interest deduction matters in real life, not just tax forms.

• Quick context: What changed with the Tax Cuts and Jobs Act (TCJA) and why the number 750,000 matters.

• Old vs new rules: A concise compare to help you remember what’s different.

• Details that matter: When the cap applies, primary and secondary residences, and the role of home equity debt.

• Simple examples: Scenarios that illustrate how the deduction works for new loans after 12/15/2017.

• Practical takeaways: How this affects planning and filing, and how it fits with the broader tax picture (like the standard deduction).

• Quick study prompts: Key points to keep in mind and where to look for more info.

• Closing thought: A real-world angle that makes the rule easier to remember.

Mortgages and the deduction: a real-world angle you’ll actually use

Let me explain why this number 750,000 is more than just a tax nerd fact. If you’ve ever wondered how much interest you can write off from a home loan, that cap matters a lot when you’re deciding how big a loan to take on a primary residence or a second home. The change didn’t just shuffle a line on a chart. It reshaped how many people itemize deductions and, by extension, how their tax liability looks. And yes, it’s one of those topics that sounds dry until you realize it can affect real-world decisions, like whether upgrading your home makes financial sense this year.

Old rules vs new rules: the quick memory jog

Before December 15, 2017, you could deduct interest on mortgage debt up to:

• $1,000,000 for a primary residence, plus

• $100,000 for home equity debt (HE debt), even if that debt wasn’t used to buy, build, or substantially improve the home.

Then the TCJA arrived and nudged those numbers downward for new debt. For loans taken out after December 15, 2017, the maximum debt eligible for the mortgage interest deduction dropped to $750,000. That limit applies to both primary and secondary residences. In plain terms: if your new loan was originated on or after that date, the deductible portion of the interest is capped at the interest on up to $750,000 of debt.

How this actually plays out

The biggest thing to keep in mind is timing and purpose. The change targets new borrowings more than existing arrangements. If you already had a mortgage before the cutoff, the old higher limit can still apply to that pre-2018 debt, but only up to the overall ceiling that was in place at the time. In contrast, new mortgages—loans originated after December 15, 2017—face the $750,000 ceiling. Secondary homes count too, as long as the loan is secured by the home.

A note on home equity debt: the simple version

The laws grew a bit more nuanced here. For many years, interest on home equity loans and lines of credit could be deducted, provided the proceeds were used for home improvements and the total debt stayed within the limits. Under the TCJA, the deduction for home equity debt essentially vanished for most folks—unless that HE debt is used to substantially improve the home. In practice, that means if you’re holding a HELOC and you’re using the funds for something unrelated to increasing the home’s value (like a vacation, college tuition, or a car), the interest likely isn’t deductible. If you’re using HE debt strictly for home upgrades, the interest may still be deductible, but you’ll want to track the use carefully and confirm current guidance, because the rules have to be interpreted in light of your overall tax situation.

Two quick scenarios to anchor the idea

• Scenario A: You take out a new mortgage of $800,000 after 12/15/2017. Because the loan is above the $750,000 cap, only the interest on the first $750,000 of debt qualifies for the deduction. The remaining $50,000 isn’t deductible as mortgage interest deduction, even though you’re still paying interest on the full loan amount.

• Scenario B: You take out a new mortgage of $700,000 after 12/15/2017. That entire debt amount is within the cap, so, assuming the funds are used to acquire or improve the home, the interest on the full $700,000 qualifies for the deduction (subject to the usual itemizing rules and any other limits).

Why this matters for planning and filing

A lot of the practical impact comes down to itemizing vs. taking the standard deduction. The Tax Cuts and Jobs Act didn’t just drop a cap; it also nearly doubled the standard deduction in most cases. For many filers, that means the standard deduction is larger than their total itemizable deductions, so they don’t itemize at all. If you don’t itemize, you don’t get to claim the mortgage interest deduction, regardless of the cap. That’s a big shift from the old days when a larger home loan could quietly tilt your tax picture.

So, what should you do with this information?

• Do a quick year-end check: If you’re considering or have a loan after 12/15/2017, estimate whether your total itemizable deductions exceed the standard deduction. If not, you may not benefit from itemizing, even if your mortgage interest is substantial.

• Keep track of how you use home equity debt: If you’re using HELOC funds for home improvements, save your records. The deductible amount may hinge on the use of those funds.

• Remember the cap doesn’t always apply to every home loan scenario: Pre-2018 debt can sometimes be treated differently, and there are nuances when multiple properties are involved or when refinancings occur.

A few concrete, learner-friendly reminders

• The cap is for new debt after 12/15/2017: that’s the practical line you’ll see on forms and in guidance. If your mortgage was taken out before that date, the higher thresholds may still apply to that specific loan, but the overall limits and how they interact with other debt can get tricky.

• The deduction is for interest, not for principal: you’re deducting the interest portion of your payment, not the amount of the loan you’re repaying.

• Both primary and secondary residences count: second homes can qualify for the deduction, as long as the loan is secured by the home.

Connecting the dots with Intuit Academy Tax Level 1 topics

If you’re exploring the Tax Level 1 landscape, this topic helps anchor several core ideas:

• Itemized deductions vs the standard deduction: understanding who benefits and when to choose one path over the other.

• The concept of debt limits and how they affect deductible interest: timing, loan purpose, and property type all matter.

• The practical flow from loan origination to tax impact: you don’t just compute numbers; you interpret how new rules shape real-world decisions.

• The role of the taxpayer’s broader financial picture: mortgage rules interact with other credits, deductions, and income considerations, so a holistic view is essential.

A little guidance for studying with real-world relevance

• Think in terms of dashboards: if you were a tax preparer, what would you look at first on a client’s file? The loan amount, the date of origination, and the use of HE debt would be your first standby checks.

• Use simple examples to teach the rule to someone else: explain to a friend how a $800,000 loan after 12/15/2017 would be treated versus a $700,000 loan. Explaining it aloud helps cement the concept.

• Tie it to current-year filings: tax software will guide you through the deduction calculations, but knowing the underlying rule helps you spot mismatches or red flags in reports.

A few approachable takeaways you can carry around

• The cap you need to memorize for new debt after 12/15/2017 is $750,000. This is the anchor point for modern mortgage interest deductions.

• This cap applies to both primary and secondary residences, but be mindful of pre-2018 debt and any refinancings. Those scenarios carry their own subtleties.

• Home equity debt is not automatically deductible post-TCJA; the key question is how the HE debt is used. If it’s for home improvements, you may still have a deduction, but verify how the total debt sits with your tax situation.

• Because the standard deduction changed, not everyone itemizes anymore. The mortgage interest deduction remains a powerful tool, but its value depends on your overall deductions and filing choices.

One last thought to keep in mind

Tax rules aren’t static chalk lines on a board — they’re living guidelines that respond to policy decisions and real-world behavior. The $750,000 cap isn’t just a number; it’s a reflection of how tax policy tries to balance encouraging homeownership with simplifying the tax code. When you see a loan in your future (or you’re helping someone else navigate theirs), you’ll know where that line sits and how it might influence the shape of a tax bill.

If you’re revisiting this topic, you’ll find that a clear mental model helps: remember “750k on new debt after 12/15/2017, for primary or secondary homes, with HE debt largely constrained.” It’s a compact summary that covers the core rule and keeps you anchored when you scan a pile of forms or read through a tax guide.

And that’s the essence in a nutshell: the mortgage interest deduction cap after December 15, 2017, is $750,000 for new debt, with the usual caveats about pre-2018 debt, home equity treatment, and the decision to itemize versus take the standard deduction. It’s one piece of the tax puzzle, but a pretty important one for homeowners and future homeowners alike.