My client had an 85k home equity line, all home aquisition debt. Now he has added 200k to it, to buy the lot next to his house, tear down the old house and eventually build a house. The use of this house at this time is unknown so it is advantagous due to AMT to treat this 200k as investment debt (client has a lot of investment income from a partnership). Can I elect to treat the 200k as money borrowed for investing, ie. elect out of home mortgage treatment, without affecting the previous 85k of home aquisition debt?
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