16 Jan Should I refi after the tax plan?

Q. I live in N.J., married with four children, work in N.Y. and pay more than $10,000 in property taxes. I have seven years left on my mortgage so I pay little interest. I expect my taxes to go up due to the elimination of SALT and personal exemptions. I want to offset this. Should I refinance back to a 30-year mortgage because the interest is tax deductible?
— Homeowner

A. We understand your frustration with the loss of some of the deductible expenses you’ve grown accustomed to.

But refinancing your mortgage isn’t necessarily the answer.

“I wouldn’t recommend refinancing for purposes of creating a tax deduction since it would be creating interest that would need to be paid to have a deduction,” said Len Nitti, a certified public accountant with Wilkin & Guttenplan in East Brunswick.

Nitti said the amount of debt for which mortgage interest can be deducted is now capped at $750,000 under the new law, down from $1 million.

“Loans in place prior to the law change are `grandfathered’ and still subject to the $1 million limitation,” he said. “The new law no longer allows for deductions of home equity interest.”

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This post was first published in January 2018.