Under the TCJA, what is the new limitation amount for mortgage interest deduction on loans for a principal residence?

The Tax Cuts and Jobs Act (TCJA), enacted in December 2017, introduced significant changes to the mortgage interest deduction. One of the key changes was the new limitation on the amount of mortgage debt for which interest could be deducted. Under the TCJA, the limit was reduced to $750,000 for new loans taken out after December 15, 2017, for a principal residence. This means that taxpayers can only claim mortgage interest deductions on loans up to $750,000.

It's important to note that this change applies specifically to loans secured by a principal residence; existing loans that were taken out prior to the enactment of the TCJA may still be subject to the previous limit of $1 million, depending on their specific terms and conditions. This limitation was part of a broader strategy to simplify the tax code and adjust itemized deductions to generate more revenue during the tax reform process. Understanding this change is crucial for homeowners who are considering taking out a mortgage or refinancing an existing loan.