David purchased his home in 2020 for $1 million, securing a mortgage for the full amount. In 2023, he pays $10,000 in mortgage interest. Since his mortgage was acquired after December 15, 2017, he can only deduct the interest on the first $750,000 of the mortgage. This means he can deduct $7,500 in interest, as the $750,000 represents 75% of the total mortgage amount. The remaining $2,500 in interest is not deductible. This scenario demonstrates the impact of the $750,000 limit on mortgages acquired after the Act's passage.

* **Reduced Tax Liability:** By deducting mortgage interest from your taxable income, you effectively reduce your overall tax burden, putting more money back in your pocket. Further information https://tradeprofinances.com/mortgage/is-mortgage-interest-tax-deductible-in-california/ Calculating the mortgage interest deduction requires careful attention to detail. Here's a step-by-step guide to help you determine your deduction: | Deductibility | Yes | No | Medical Expenses: This covers loans taken out to pay for medical bills, including treatment, surgery, or hospitalization. While California doesn't have a specific mortgage interest deduction, it offers a homeownership exemption that provides some financial relief for homeowners. The homeowner exemption allows residents to reduce their property tax liability by a certain amount each year. The amount of the exemption is determined by the homeowner's age, eligibility for disability, and whether they are a veteran. This exemption can be particularly beneficial for seniors and those with disabilities. ## The Basics of the Mortgage Interest Deduction