Home Mortgage Interest

[bruehaus]

Is a taxpayer allowed deductible interest for an acquisition loan of $1,100,000 (where there is only one loan), without exceeding the $1,000,000 acquisition limitation by classifying the extra $100,000 as home equity debt?
If the extra $100,000 qualifies as equity debt, is it subject to AMT?

[taxea]

Home Mortgage Interest

check Pub 17 taxea

[Kram BergGold]

My take

I would deduct interest on 1million as home acquisition debt. I would deduct interest on 100k as home equity debt, not subject to AMT because the money was used to buy or improve the house.

[solomon]

It seems with just one loan and construing 100K as home equity at the time of the acquisition is a bit blurring. § 163(3)(h)(B)(C) appears to imply two separate transactions. By definition, home equity debt is not acquisition debt - not acquisition debt treated partially as home equity debt.

By definition, acquisition debt is debt in acquiring, constructing, or improving and secured by the qualified residence.

IRC 163

[solomon]

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http://www.irs.gov/pub/irs-wd/0940030.pdf