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Mortgage interest tax
Hello, We live in silicon valley where home prices have soared like crazy !!
We recently closed our new home with an outstanding loan amount of $1.4M
Our current home has an outstanding loan of $450K. We plan to rent it out starting next month.
Understand I can write off mortgage interest only up to $1M.
I also plan to payoff the current mortgage in about a month (the outstanding $450K)
Am I better off paying the $450K towards the new loan, reducing it below $1M ? (if there is a difference between how the $1M maximum is treated between primary residence and rental property)
The current home has been our primary home for 8 months and the new home will be the primary home for 4 months, with some overlap. How will this be taken into account with the tax filing forms
Even if we pay down the $450K towards the new home loan, I understand my monthly payment will not go down (We took a 5/1 ARM loan for the new home) , but how will the outstanding loan amount max be calculated ?
In short, I would have had --
$450K mortgage for 7 months of the year (current home before we closed the new home)
$1.4M mortage for the new home for 5 months as our primary residence + $450K for 1 month
And what happens if we can somehow get $850K more in a month to bring the total down to less than a million for both homes combined ? we would have still have had a month or two when the outstanding mortgage was over $1M. how are the dates calculated ? Is it $1M on Dec 31st ?
Thanks,