Home Mortgage Interest Deduction

Forum|Forum|11 months ago
April 7, 2025
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I took out a mortgage in July 2016 to buy my primary home. In 2024 I added to the balance of of my home acquisition debt to make substantial improvements to my primary home. Is the additional debt subject to the $1M/$500K home acquisition debt limit since it is the same primary home purchased in 2016, or is it considered a new loan and subject to the $750K/$375K home acquisition debt limit for debt incurred after 12/15/2017?

In the step by step mode in TT, it asks "Is this loan a HELOC or a refinance of a previous loan?". One of the possible responses is "No, this loan is neither of these". What qualifies as "neither of these"?

Thanks

Vanessa A

Since you modified the loan in 2024, it would be subject to the $750/$375 limit.

Neither of these would mean it was the original loan that was not refinanced, did not take out extra money or was a home equity loan.

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camassa64Author

Thanks, Vanessa.

zomboo

What do you mean by 'In 2024 I added to the balance of of my home acquisition debt'. Did you do a cash-out refinance or did you take out a second mortgage? If you refinanced and took out cash, the limit on the new loan is $750K. If you took out a second mortgage, your existing mortgage limit is still $1.1M and the limit on the second mortgage is $750K. Note, however, that the $750K limit on the second mortgage is reduced by the limit amount used up on the existing mortgage.