The Tax Cuts and Jobs Act includes a substantial change to the allowable amount of mortgage interest which is tax deductible.   For those who are contemplating purchasing expensive homes and taking out a mortgage with a principal balance of more than $750,000, the interest on the amount over $750,000 will not be tax deductible.  For mortgages issued prior to December 15, 2017, the mortgage interest is deductible for principal mortgage amounts of up to $1,000,000.  However, after December 15, 2017, that amount is reduced to principal amounts of up to  $750,000.  This only applies to properties purchased after December 15, 2017.  Absent any extension of this law, the amount reverts to $1,000,000 in 2026. 

Another big change relates to home equity lines of credit on your residence.  In the past, the mortgage and home equity line of credit could be lumped together, and the interest on both deducted up to the maximum allowed loan amount.  That is no longer the case.  It does not matter if the home equity line of credit was taken out before or after the change in tax law.  In general, the interest on home equity lines of credit is no longer deductible.  There are some limited exceptions to this where the funds are used to substantially improve the residence, but even this exception requires very specific requirements to be met.  This tax change could have a large impact on those who intentionally took out a home equity line of credit rather than refinance their mortgage to a larger amount. Without this deduction, taxable income will be higher.