Home Improvements Loan

[kthurman]

I have a client who wants to refinance his existing two loans and pull out an additional amount for improvements. This will not be a construction loan, so I am hesitant to advise the client that he has 24 months in which to spend all of the additional proceeds on improvements. Can anyone give me guidance? I've reviewed Pub 936, RIA, the TaxBook, and Notice 88-74 already.

Many thanks,

Kevin

[JG EA]

I have a client who wants to refinance his existing two loans and pull out an additional amount for improvements. This will not be a construction loan, so I am hesitant to advise the client that he has 24 months in which to spend all of the additional proceeds on improvements. Can anyone give me guidance? I've reviewed Pub 936, RIA, the TaxBook, and Notice 88-74 already.

Many thanks,

Kevin

As far as I know the 24 months is just in the original building of the home. So, I would say that until he actually spends the money for improvements the additional amount will be in the category of the $100,000 limit for home mortgage interest spent on other things.

Also don't forget that even if spent for improvements (and therefore completely deductible) the closing costs need to be included in the calculations for what is added back for AMT.