Mortgage and Home Equity Loan InterestThe cost of buying or owning a home has traditionally been made more affordable by the deductibility of mortgage interest and real estate taxes. Although real estate taxes are included in the $10,000 limit for all state and local taxes, mortgage interest remains deductible – with two important changes.First, for mortgages taken out after December 14, 2017, only the interest on the first $750,000 of mortgage debt is deductible. This may not be a factor where housing prices are relatively low and mortgages are below this limit. However, a mortgage this size is common in locations with high residential real estate costs. For example, the median home price in San Francisco is $1.5 million.Also, interest on home equity loans will no longer be deductible after 2017. This affects interest on all home equity loans used for purposes other than to improve the current home, even if the loan was taken out before December 15, 2017.So, if you take out a mortgage of less than $750,000 after December 14, 2017, or if your mortgage is more than $750,000, but you took it out before that date, you won’t lose any of your interest deduction. Of course, if for other reasons you can’t itemize, your otherwise deductible mortgage interest will have no effect on reducing your federal tax.