I don't think so either.
But that's what the IRS has decided.
The IRS Office of Chief Counsel has sent agency staff a memo telling them that taxpayers can deduct interest on the first $1.1 million of a home mortgage. That's $100,000 more than before.
Basically, the IRS has decided that these folks, who already can afford a million-dollar-plus mortgage (or so we presume; who knows given the loan malfeasance we've seen, but that's for another blog item) get to automatically combine the statutory limits of $1 million in acquisition debt and $100,000 in home equity debt and then write off the interest paid on the $1.1 million loan amount.
Hmmm. So folks who can afford the maximum statutorily-deductible loan amounts for two separate products get to claim them in one fell swoop without actually taking out a home equity loan. Why do I hear the Church Lady's skeptical "How convenient" in my head every time I think about this IRS change of deduction heart?
I rant about elaborate on the increased mortgage interest deduction decision, which I was tipped to on Twitter by @JoeTaxpayerBlog (thanks, Joe!), over at my other blog, Eye on the IRS.
You can let me know if you share my misgivings about the increased write-off for rich homeowners by leaving me a note at that blog. Or, after reading that post, feel free to bounce back to Don't Mess With Taxes and leave your comments here.
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