Can you apply all of your mortgage interest as a tax deduction if you refinanced more than the original loan?

Question

The cash out was not used for home improvement, but I am not subject to the AMT.

Does the rule that you can only apply the cash out interest used for home improvement only apply in AMT circumstances?

Answer 1

Yes, this little know portion of the tax law only kicks in under AMT.

Answer 2

You can deduct interest on the refinanced loan, but only on an amount equal to the sum of (a) the balance of the original loan at the time of the refinancing, and (b) $100,000. In other words, if the cash out was not more than $100,000, you can deduct all the interest.

There is another limitation, which is that interest is not deductible on any amount of the refinanced loan that exceeds the fair market value of the house. This is rarely a problem!

Answer 3

between the excellent myths of financial thinking in the final 40 years has been the theory you're a technique or the different profiting by making use of writing off (deducting) loan interest. in basic terms in the previous few years has this fantasy approached fact while the APR for many loan loans dropped under 6%. yet another answerer gave a greater appropriate and greater unique answer regarding the thank you to do the maths right here. yet he did provide what I evaluate the worst available suggestion on one situation. He suggested rolling your mastercard debt right into a 2d loan. by no potential ever try this. in the form that disaster strikes and additionally you will't pay the mastercard business company, properly that's a annoying spot to be in. yet once you would be unable to pay the financial employer returned, they are going to take the collateral you submit -- your place!