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| *Loan,banking and credit>>>mortgage loan |
Can you apply all of your mortgage interest as a tax deduction if you refinanced more than the original loan? |
The cash out was not used for home improvement, but I am not subject to the AMT. Does the rule that you can only apply the cash out interest used for home improvement only apply in AMT circumstances? Yes, this little know portion of the tax law only kicks in under AMT. You can deduct interest on the refinanced loan, but only on an amount equal to the sum of (a) the balance of the original loan at the time of the refinancing, and (b) $100,000. In other words, if the cash out was not more than $100,000, you can deduct all the interest. There is another limitation, which is that interest is not deductible on any amount of the refinanced loan that exceeds the fair market value of the house. This is rarely a problem! Internal Revenue Code section 163(h). |
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