Question

What is home equity debt? Is there an interest and property tax deduction I can take? If so, how many years back can I claim them?

Answer

You can only claim the interest and property tax deduction in the year in which you paid the taxes. You’ll claim these as itemized deductions on Schedule A.

The mortgage interest deduction for home acquisition debt is limited to the interest on $1 million. The limit is $500,000 for married filing separately. Home acquisition debt is a mortgage taken out after Oct. 13, 1987, on a qualified home to:

  • Buy the home
  • Build the home
  • Substantially improve the home

The mortgage interest deduction for home equity debt is limited to the interest on the lesser of these:

  • $100,000 — or $50,000 if married filing separately
  • The total of the home’s fair market value (FMV) reduced (but not below zero) by the amount of its home acquisition debt

Related Topics

Related Resources

What Is an Enrolled Agent or EA?

What does it mean to be an enrolled agent? Learn more about the roles and requirements of enrolled agent (EA) tax preparers at H&R Block.

What Is Virtual Tax Preparation?

Virtual tax preparations let you complete your taxes online from the comfort of your home. Find out how easy remote tax preparations can be at H&R Block.

What Types of Tax Preparers Are There?

Tax preparers can have various designation and specialties. Learn how different types of tax preparers at H&R Block can help you in person or virtually.

How Does Changing Jobs Affect Your Tax Return?

Changing jobs can come with tax implications like job search and moving expense deductions. Learn more about these potential benefits at H&R Block.