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Interest Deductions And I25 Percent Financing
Question: Is the interest on 125 percent financing deductible?
Answer: This is a somewhat complex question. Interest on loans secured by real estate is generally deductible if the acquisition mortgage value is not more than $1 million. Interest is also deductible home equity loans up to $100,000. With 125 percent financing you have a loan that is worth more than the house -- big trouble if you need to sell. In terms of taxes, the amount above the value of the property may be regarded as "excess" mortgage. The "excess" amount may be taxable when the home is sold. See a tax pro for specifics. Also, interest on that portion of the financing which tops the property's fair market value may not be a write-off. Please speak with a tax pro for details.
Written by Peter G. Miller.
© 1997 Peter G. Miller. All Rights Reserved. Rules, Disclaimers & Notices.
Copyright © 2012 Realty Times. All Rights Reserved.
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