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?
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