As a homeowner, you qualify for a number of deductions on your taxes. However, for most homeowners, one of the largest savings will come from the mortgage interest deduction. An experienced certified public accountant will help you maximize your deductions each year, but it’s still important to know what to expect. For 2018, there will be some changes to the deduction that could impact your overall refund. Here’s what you need to know.

What Is the Mortgage Interest Deduction?

When you finance a house with a traditional mortgage, you pay interest on the home loan each year. This interest amount can be used as a deduction for the year’s overall tax liability. Your certified public accountant will use this deduction to reduce how much money you owe the IRS at the end of the year.

How It’s Changed

For 2018, the amount of mortgage interest that can be deducted has been reduced. For new buyers, you’re only allowed to deduct the interest from a home loan of $750,000 or less. If the loan is for an amount greater than that, the tax deduction will be based off the new maximum limit, regardless of the amount of the loan. In previous years, the maximum loan amount was $1 million.

The decrease in qualifying loan amounts only affects new homebuyers. Those with mortgages in existence prior to December 15, 2017 will still be permitted to take deductions on home loans of up to $1 million. For existing home loans, the changes to your deductions should not be noticeable.

For homeowners who refinanced their loan or took out a second mortgage, the deductions will likely fall under the new maximum limit. For those with home equity loans or second mortgages used for purposes other than improving the house, you’re only permitted to deduct interest payments on up to $750,000 for the loan. If you have any questions about the eligibility of your home loan, speak with your certified public accountant.

Changing laws can make tax preparation difficult. Instead of handling your return on your own, schedule an appointment with a certified public accountant at the firm of Donna J Troutman CPA PC in Lewisburg, PA. Their dedicated staff will help you get the most out of your return whether you’re a small business owner or filing taxes for your family. Learn more about their services online, and call (570) 523-7337 to schedule a free consultation.