Loans Only?
Q: I am not sure I understand the limitation on $100,000 in non-purchase debt. If the loan amount is $176,000, are you saying I can only deduct interest on the $100,000 and not the $76,000? Is this a limitation on Home equity loans only? Also what is "non-purchase debt".
A: As long as the loan is secured by the home, it will be deductible as home mortgage interest, BUT, it will be subject to several limitations. One being $100,000 in non-purchase debt. So if you re-fi say, $250,000 then the interest that is deductible is limited to that under $100,000. I am not sure I understand the limitation on $100,000 in non-purchase debt. If the loan amount is $176,000, are you saying I can only deduct interest on the $100,000 and not the $76,000? Is this a limitation on Home equity loans only? Also what is "non-purchase debt". I mis-posted earlier, the amount of the refinance loan UP TO the existing mortgage debt would be deductible (it's acquisition debt), and not more than another $100,000 in equity would be deductible.