November 05, 2017
The Washington Post had a good piece pointing out the relatively small share of the population that would be hit by the cap of $500,000 on the amount of the principal for which interest is tax deductible. While it pointed out that a relatively small share of homes sell for a large enough amount to require a $500,000 mortgage and that the interest up to $500,000 will still be deductible, it neglected to point out that the principal dwindles over time so that even people who took out a mortgage of more than $500,000 will soon find that all their interest is still deductible.
For example, if someone takes out a $600,000, 30-year mortgage, after 7–8 years they will have paid off more than $100,000 of this mortgage so that all of their interest is again deductible. For mortgages over, but near, $500,000, it will only for the first years of a mortgage that a homeowner will be affected by this provision.
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