I am having some issues figuring out how the tax deduction for mortgage interest works. This is for California, USA
I have a home that I bought for $807,000, with 2 loans:
- $645,600 at 4.5%
- $80,700 at 6% (But only interest for the first 10 years)
I know that i claim interest paid, up to 500k of home value, as tax deduction.
How do I calculate that, when I have 2 loans, and my home value is over 500k?
Can I deduct the $483.84 I pay for the second loan, plus 64.9%
(500,000-80,700)/645,600=0.64947 of the $2,421.00 interest I pay for the first loan, for a total tax deduction of 2,904.84