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Richard Rider

Mortgage interest deduction facts about California

Some facts to consider about California and home mortgage interest deductibility:

The average home mortgage balance in California is under $350,000 — far below the proposed $500,000 loan cap on deducting home interest on income taxes.

According to Zillow, the median home in California is worth $509,600.

Assuming one puts 10% down when buying a median-priced CA home today, that would make the loan $458,640.  With 20% down, the loan would be $407,680.

Moreover, all existing home loans up to $1,000,000 are grandfathered as to deductibility.  Loans above $1,000,000 are not deductible under CURRENT federal tax law, and that will not change.

Furthermore, as I read the convoluted language of the bill, if a new mortgage loan exceeds $500K, the deduction is STILL allowed for the first $500K. For instance, if the mortgage balance is $600K, then roughly 5/6 of the loan interest would still be deductible.

Finally (and this one is a counterintuitive shocker), Canada does not allow an income tax deduction for mortgage interest on a home residence, and yet a significantly higher percentage of Canadians own homes than Americans. How DO they do it??