Effect of Tax Changes on Refinance In-Progress

November 2, 2017 2:18 PM

We're in the middle of a cash-out mortgage, and are looking for advice and/or explanation of the new rules for mortgage interest in the new congressional tax proposal.

Under the heading SEC. 1302. MORTGAGE INTEREST in the proposed tax bill:
https://waysandmeansforms.house.gov/uploadedfiles/bill_text.pdf

The mortgage deduction is halved, making interest only deductible on loans up to $500K. Furthermore, it takes effect on any loan happening after 11/2/2017 (today!).

We're in the middle of a cash-out refinance. We've signed the intent to proceed, but haven't closed yet. I'm concerned we'll incur a bigger tax bill than we anticipated when the process started. It's not clear from my reading whether this loan would be grandfathered in. We talked to our mortgage broker, who wasn't aware of these proposed rules, so wasn't much help.

Does anyone know of any analysis on-line where they look into this in more detail. I've tried searching, but can only turn up pretty general, top-level discussions.

posted by mach to Law & Government (1 answer total)

If you read a little further it says: "‘‘(iv) BINDING CONTRACT EXCEP-TION.—In the case of a taxpayer who enters into a written binding contract before November 2, 2017, to close on the purchase of a principal residence before January 1, 2018, and who purchases such residence before April 1, 2018, subparagraphs (A) and (B) shall be applied by substituting ‘April 1, 2018’ for ‘November 2, 22 2017’.’’. "

So you may be okay? I dunno.
posted by jeffamaphone at 8:09 PM on November 2, 2017