Then all your tax deductions of mortgage interest are considered, if you refinanced more than the original loan?

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The cash-out has not been used for the renovation, but I’m not the AMT.Ist the rule that only one of interest on the money for the renovation only be used in circumstances AMT applies?

2 Comments
  1. Reply
    Wayne Z
    February 17, 2011 at 10:44 am

    Yes, this little know portion of the tax law only kicks in under AMT.

  2. Reply
    TaxGuru
    February 17, 2011 at 10:45 am

    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!

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