Deducting Mortgage Interest Under the New Tax Law

The Tax Cuts and Jobs Act (TCJA) made significant changes to the tax law. One of the many changes is the deductibility of home mortgage interest. Before the change, taxpayers could deduct mortgage interest on debt up to $1,000,000, plus an additional $100,00 for home equity debt. The IRS interpreted this to mean interest on debt up to $1.1 million could be deducted.

Under the TCJA, the mortgage interest deduction is now limited to interest on debt up to $750,000, with no additional amount for home equity. While this was originally thought to mean interest on home equity debt could no longer be deducted at all, the IRS has clarified that interest on home equity debt is still deductible. However, the proceeds from the home equity loan must be used to build, buy, or substantially improve the home that secures the loan. In other words, taxpayers cannot take out a home equity loan and use the proceeds for another purpose (i.e. pay off credit card debt), if they want to deduct the interest.

It is also important to note that the new limitations apply only to new acquisition debt. Taxpayers who purchased their homes prior to December 14, 2017 may still use the old limitation of $1,100,000 to deduct their mortgage interest.

If you have any additional questions, please contact Rebecca Bischoff, CPA at 314.576.1350 or

Should I Buy or Lease My Dental Practice Space?

One of the most difficult decisions you face when operating your dental practice is choosing between buying or leasing your practice space. There are pros and cons to both options, and you must weigh them up front with care. Here are some factors to consider when deciding whether to buy or lease your office.

Upfront Costs

Buying a building usually requires you to make a down payment as a certain percentage of the purchase price. This can be a considerable outlay, especially for a small business. Leasing typically requires you to pay the equivalent of one to two months’ rent upfront. It allows you to free up working capital that you can use to grow your business.


When you purchase practice space, you acquire an asset, which builds equity and appreciates in value over time. You can also borrow against your property if the need arises. When you lease practice space, you do not build equity and, as a result, cannot borrow against your property.

Overhead Costs

Leasing practice space comes with the volatility of variable overhead costs, which can make it difficult for you to make long-term financial projections and decisions. Depending on the terms of your mortgage, buying practice space can provide you with greater cost certainty. Once you have paid off your mortgage, your practice space will be yours to sell or keep.


Leasing gives you the flexibility to move once your fixed-term tenancy ends. This is advantageous if you’re unable to forecast your space needs or you only plan to stay in an area for a short period of time. When you buy, you have less flexibility and may incur significant relocation costs.  Selling a building can be difficult, especially a dental office.

Property Management

Buying practice space requires you to take responsibility for property management. You must also ensure that you can afford maintenance checks, repairs and renovations. When you’re leasing, your landlord takes responsibility for property management issues. This means you can focus time and effort on running your business.  This is not always the case.  You should discuss items like maintenance, upkeep, etc. with the leasing company.  This will typically change based on where you’re renting.

Choosing between buying and leasing practice space can be a challenge, as there are many factors to consider. Careful evaluation of the pros and cons will help you to decide on the best option for you.  Discussing your situation with a BWTP CPA can take much of the headache and difficulty out of making financial decisions.  We know what it takes to be a successful dentist and are here to help you every step of the way.

Should You Hold a Mortgage?

Selling a vacation home or other property in today’s market can be difficult. Even if you find a potential buyer, the buyer might have trouble securing financing. If you’re willing to hold a mortgage on the property, you may be able to make a deal. But should you? Here are some things to think about when you are weighing the decision.

Price. Since you won’t receive the full sale price up front, you should expect to receive a better price for your property from a buyer who wants you to hold a mortgage than from someone who can pay cash.

Cash flow. If you have a short-term need for cash — to buy another property, pay off your own mortgage, or pay college or medical bills, for example — holding a mortgage may not be a good option for you.

Return on investment. You’ll want to compare the interest rate the buyer is willing to pay on the mortgage with the rate of return you might be able to earn if you reinvested the full after-tax sale proceeds in an alternative investment.

Risk. Even if you’re comfortable with the buyer now, there’s always the chance the buyer could default on the note later on and you’d have to foreclose. Is that a risk you’re willing to take?

Taxes. If you hold a mortgage, you’ll generally report any profit on the sale gradually, in the years you receive payments from the buyer. Be sure you’ve assessed the impact on your taxes before you make your ­decision.