Taxpayer has a main home secured by main home mortgage . Taxpayer jointly owns a vacation home which was inherited. Taxpayer takes out a mortgage to buy out the joint owner and also takes out an additional $ 50,000 to make permanent improvements to their main home. My question, Can the $50,000 be deductable as Home Mortgage Interest against the main home? If, the $ 50,000 is taken as Home Equity debt he will have gone over the $ 100.000 ceiling by $25,000. That is the reason for my question , Can the $50,000 be dedutable as Home Mortgage interest against the main home.
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Yes, probably
If the new $50k was used to make "substantial improvements" to the T/P's main home ... i.e. his "qualified residence" ... it is acquisition indebtedness and fully deductible as such (subject to the $1,000,000 limit). (Code ยง163(h)(3)(B)(i))Roland Slugg
"I do what I can." -
I think what he/she is asking is if they can take the whole loan of $50K off as interest, the answer is no b/c it's not interest. Only the interest paid on the $50K is deductible.Comment
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