90 day rule homebuying

Paying Cash for a Home? Beware of the 90 Day Rule


With inventory levels low in this competitive housing environment, some people are opting to make cash offers on homes to make their purchase agreement look more attractive to potential sellers. While this may help you get your offer accepted, there is a large pitfall you must understand. The IRS gives you a 90-day window to put a mortgage on a property to gain the benefits associated with this loan being considered “acquisition indebtedness”.

In other words, if you do not apply for a loan within the first 90 days after the closing date, the interest on the loan that you obtain will not be tax-deductible. Also, with the tax law change in 2018, home equity indebtedness will be no longer tax-deductible after January 1, 2019. Reach out to your tax professional with any questions regarding this and please don’t hesitate to call us regarding loan possibilities.

Happy House Hunting!!