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The Royce CPA Firm

Certified Public Accountant specializing in personal, non-profit and forensic accounting and tax preparation

March 30, 2018 By Crystal Royce

Tax Reform Attacks Home Mortgage Interest Deductions

The recent tax reform contains two big changes to how much you can deduct in mortgage interest for tax years 2018 through 2025:

  1. During this seven-year period, you may not deduct any interest on prior or current home equity debt, with certain exceptions.
  2. Also during this seven-year period, the maximum amount you may treat as acquisition debt for homes purchased after December 15, 2017, is $750,000.

Exception alert. Your home equity loan may include acquisition or home-improvement debt, and that debt continues as deductible under the recent tax reform rules.

Example. Billy took out a $90,000 home equity loan in 2015. He used $50,000 to remodel portions of his home and used the remaining $40,000 for his daughter’s college tuition. Billy’s total home mortgages never exceeded $1.1 million. Under the new law, Billy may deduct five-ninths of his home equity loan interest in 2018.

Acquisition debt. When you buy your main home or a second home and take out mortgages secured by those homes, your mortgages are called acquisition debt. You can add acquisition debt when you improve your main or second home, and that new debt is secured by the home you improved.

Refinancing alert. Your acquisition debt does not increase when you refinance unless you use the new monies to improve the home.

Example. Tom bought a home in 2010 and took out a $500,000 mortgage that he secured with the home. In 2018, Tom has paid down his mortgage to $430,000, and his home has increased in value to $800,000. Tom refinances the home and takes out a new mortgage in the amount of $600,000, secured by the home.

If Tom uses none of the new money to improve his home, his mortgage interest deduction in 2018 is based on the $430,000 of mortgage principal that remained as of the date of his refinancing. To put this in perspective, your original acquisition debt never increases on that original home. To increase your debt eligible for the home mortgage interest deduction, you need to use the new debt to improve the home.

Ceilings. Because of tax reform, you now have two possible 2018 ceilings on your home mortgages that are eligible for the mortgage interest deductions.

$1.1 million. For indebtedness incurred before December 15, 2017, you may not deduct interest on more than $1.1 million in mortgages ($1 million in acquisition debt and $100,000 in home equity debt used for acquisition or improvements). The original $1.1 million ceiling is grandfathered for acquisition and improvement loans in existence before December 15, 2017.

Example. Sam took out his mortgages during 2013. Sam faces the $1.1 million ceiling in 2018.

$750,000. For home mortgage indebtedness incurred on or after December 15, 2017, you may deduct interest on no more than $750,000 of home mortgages.

Example. Jim took out his mortgage in 2018. He faces the $750,000 ceiling.

Exception. If you entered into a written, binding contract before December 15, 2017, to close on the purchase of a principal residence before January 1, 2018, and you complete the purchase before April 1, 2018, you fall into the $1.1 million ceiling category.

Filed Under: Miscellaneous

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3075 N Swan Rd.
Tucson, AZ 85712
email: ana@theroycecpafirm.com
tel: (520) 321-4626
fax: (520) 325-1121

About Us

Crystal Royce is an accountant turned entrepreneur with a passion for studying business. Inspired by books such as The E-Myth and The Checklist Manifesto, she started The Royce CPA Firm as a sole-proprietor in 2013 with a handful of clients and a dream. Her dream was to build an accounting firm that provided a consistent experience for all of its customers, regardless of which professional signed their tax return or managed their books.

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Testimonials

An Extraordinarily Talented, Charming, Efficient, and Delightful Team

Crystal Royce and Jason Cummins have transformed our perceptions of what an accounting firm, a CPA, and personalized, creative service mean. We were referred to Crystal this year by a trusted friend who promised a unique experience coupled with amazing knowledge and diligence – and he was understated.

Crystal analyzed our 2018 return “prepared” by another firm, and developed a series of options for us to consider in looking back and redoing the return, all of which would improve our position.
We selected one based upon a collective consensus, and, well, we are getting a 40% refund of the total additional taxes assessed and paid in 2018.

Their thorough working knowledge of the tax codes across all disciplines is impressive and top shelf. Their communication, turnaround time, and general philosophy are, at once, unique, effective, and most enjoyable.

Should you have any doubts about your current provider, I couldn’t recommend strongly enough that you take the time to meet with Chrystal and her team – you will not regret it.

Lanny Chase
Tucson

Lanny Chase
The Turquoise Inn
December 6, 2019
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Crystal is amazing!

Crystal is amazing! I had many years of bad experiences with 2 other CPA’s. When I was referred to Crystal from another client of hers and met her, she was literally everything I hoped to have in a CPA! She is extremely knowledgeable and what she doesn’t know, she is not afraid to say she doesn’t and quick to find the answer. She has been very helpful in other areas of my business and I would HIGHLY recommend her to ALL my friends or anyone looking for a CPA.

Scott Rose
Scott Rose Inc
February 20, 2018
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Great Experience!

Ms. Royce was everything I needed from a CPA and more! She was kind, confidant and intelligent. She provided her services is a very timely manner- I couldn’t have asked for anything better! I will definitely be using her for years to come!

Rachel Margalit
January 12, 2018
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Extremely knowledgeable

I had a very pleasurable time. My agent was extremely knowledgeable and polite. She should be given a raise. I contacted Mr. Oaks and he referred me to a property manager, who I hired.

Donald R Prince
January 3, 2018
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Crystal clear

Crystal Royce is the CPA whose name (Crystal) elucidates her mission– radiance in her efficiency, dedicated competence, sparkling warmth and enthusiasm as a professional accountant. First-class, she is a Royce.
I no longer dread doing my taxes… her guidance really has helped.

Margaret Sue Pennington
November 17, 2017
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No More Big Accounting Firms for Me

Crystal was referred by a mutual acquaintance and she has not disappointed. Each time I’ve met with her, I’ve been impressed by her demeanor and expertise. She strives to make you feel as though you are her only client and spends the time necessary to answer/provide explanations and clarifications to any questions posed. I am very happy to have moved on from using a large (and impersonal) SoCal accounting firm to someone local who genuinely cares about you and your business.

Brian Bub
MagZonie Management, LLC
October 12, 2017
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Royce CPA…make it your best decision too!

Working with Crystal is one of the best decisions I’ve made. Her knowledge and thoroughness have been money savers for me. I have complete confidence in her and her ability to accurately complete all our required tax filings.

Chris Richardson
IZALE Financial Group
March 12, 2017
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Great service/Very friendly staff

I hired Crystal Royce to manage my stepfather’s taxes and trust accounting after he passed away. Crystal and her staff are professional, very responsive and so nice to deal with. I highly recommend her firm.

Dagmar Serota
March 10, 2017
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Warmth and Respect

From the minute I walked into her office, I was treated with such warmth and respect. Crystal Royce was so helpful, taking the time to answer all my questions and concerns.

Cecelia P Aguilar Ortiz
March 8, 2017
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Concise and Insightful

Crystal was friendly and easy to talk to. She seemed to quickly grasp our business needs and provided practical suggestions—even on the first visit.

C. Byron Smith
Sunizona Family Farms
August 24, 2016
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Reassuring to me!

Crystal Royce exudes CPA efficiency, competency, and a sincere interest in doing what is in the best interest for me; last year she took time to evaluate whether it was best for my partner and I to file jointly or separately. Crystal researches previous tax years and detects any discrepancies . Additionally, she is warmly humanistic… A big bonus!

Margaret Sue Pennington
June 24, 2016
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IRS nightmare over thanks to Crystal

My family and I kept getting letters from the IRS asking for money for taxes that were already paid. I exhausted every route I could find on my own, including phone calls and letters to the IRS, and then IRS ignored all of my messages and their phone service would consistently refuse to let me speak to anyone. When they sent a letter threatening to seize our assets I immediately called Crystal Royce. Within 45 minutes she resolved the entire issue and fixed everything. I’m so grateful I went to her for help, and wish I had talked to her much sooner.

Gabe Gibbons
January 6, 2016
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Knowledgeable and professional

Crystal Royce is knowledgeable and professional. We feel confident knowing she will be preparing our taxes.

Sandy Sugimoto
November 2, 2015
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Crystal Royce Rocks!!

The Kirby Decree: Crystal Royce will be our CPA for as long as we are in Tucson, AZ!! We have been coming to her for the past couple years now and it just seems that tax season is a friendly season now because she makes it so easy and pleasant. SUPER Friendly! SUPER Professional!! SUPER AWESOME!! HIGHLY Recommended!

Kendell and Roxsann Kirby
April 23, 2015
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To the point, educational, confident and professional

After doing research with other competitive companies, I would not work with anyone else. The Royce CPA Firm allows me to solely focus on my business and not have to manage my own finances.

Joshua Kevin Lyle
Lyell Dent Company
April 23, 2015
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Arizona based Non-Profit Help

The Royce CPA firm has had the expertise to guide our local non-profit step by step in the accounting process as we build our organization. Professional, knowledgeable and friendly service makes Royce CPA the perfect fit for our always growing and changing accounting needs. Thank you Crystal and staff! Miriam Delicado Executive Director, The Great Gathering Non-Profit

Miriam Delicado
The Great Gathering of Humanity Inc.
February 10, 2015
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Quickbooks experts

I have had the pleasure of working with Crystal during the last year. We initially engaged with her firm on a specific project and have since become a client for all corporate tax work. Crystal is careful, thorough and easy to work with. She explains things well and has first-hand knowledge of QuickBooks which makes troubleshooting a much easier task than it has been in the past with previous CPA’s. I highly recommend the Royce CPA Firm!

Steve Henry
Northwest Exterminating
January 12, 2015
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Amazing help!

Crystal was extremely helpful with my taxes, making sure to answer every question thoroughly. Everything was a breeze and it made my intimidating freelance taxes quite painless! I look forward to continuing to work with her in the future.

Suzie Nieman
January 12, 2015
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Thank you!

It was so great to meet with you. Your company is so professional and diversified.  Thank you for trusting in me and for your support.

Jayne H.
Remedy Intelligent Staffing
November 18, 2013
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Non-profit accounting

Crystal knows non-profit accounting AND she know how to help NON financial people understand the ins and out of proper accounting and financial statements. She was WONDERFUL to work with and values transparency, integrity and professionalism. I would recommend her HIGHLY to any non profit looking for a GREAT CPA!

Ali B.
Licensed Medicare Educator and Medicare Supplement Sales
November 18, 2013
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Forensic accounting for non-profits

As a board member for a local non-profit, we hired Crystal as a forensic accountant. She gave us some extremely valuable information up front. She was very knowledgeable and prompt with her work. I would definitely recommend her.

Lynne H.
May Himmer & Company, PLLC
November 18, 2013
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The Royce CPA Firm is The Best.

Crystal Royce is a remarkable CPA – last year, my wife and I expected to pay thousands of dollars in taxes. Instead, we got a refund, and Crystal went through previous tax years and saved us hundreds more that our previous CPA’s had missed. She’s a lifesaver, and I am always happy to refer my friends, family, and fellow business owners to her.

Steve McMackin
Impulse Nine Media
November 13, 2013
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