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#5
07-18-2003, 07:05 PM
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 Re: How much is considered substantial? sethb[at]panix.com (Seth Breidbart) wrote: - quote - > Jared <jared[at]hwai.com> wrote:
Dumb question - this is the first time I've ever seen this> > "Dave Woods, EA" <d.woods[at]verizon.net> wrote: > > > It's all home acquisition debt. Refinancing a mortgage is > > > not a home equity line, and the facts you represent do not > > > change that. > > Is that true even if it's (way) beyond ninety days past > > purchase date? Wonderful if true. > Refinancing an acquisition mortgage does not recharacterize > the loan; it stays an acquisition mortgage. However, if the > amount borrowed increases, the increase is not acquisition, > so is subject to different rules. type of promo at such an attractive rate. Is this because the Fed has driven the cost of capital so far down, or have there been some regulatory changes? << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#4
07-10-2003, 02:29 PM
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| Re: How much is considered substantial? "Dave Woods, EA" <d.woods[at]verizon.net> wrote: - quote - > "Jared" <jared[at]hwai.com> wrote:
Is that true even if it's (way) beyond ninety days past> > "Dave Woods, EA" <d.woods[at]verizon.net> wrote: > > > "Jared" <jared[at]hwai.com> wrote: > > > > I am looking at rolling my mortgage over to a home equity > > > > loan. The principal would be greater than $100,000. IRS > > > > Pub. 936 states that one of the conditions under which all > > > > of the interest would be deductible would be if this were a > > > > 'home acquisition loan'. The test would be if a substantial > > > > portion were used to acquire or improve the home. My > > > > question is, how little is defensible as 'substantial'? The > > > > loan becomes much less attractive if I lose the tax > > > > deduction for the amount over $100K. > > > Use common sense. How much do you owe, and how much debt > > > are you looking to take out? > > I owe approximately $160K. I guess I could borrow $180K and > > redo our basement and master bath (two projects we have > > planned for the next few years); if I did that and then made > > a large repayment (the extra $20K), would that matter in > > terms of qualifying the loan as home acq. loan or would I > > have to prorate ($100K+interest on the $20K spent on > > remodeling, losing out on the interest for the remaining > > $60K), or would 1/3 of the nondeductible principal amount > > spent on home improvement qualify the entire $80K overage? > It's all home acquisition debt. Refinancing a mortgage is > not a home equity line, and the facts you represent do not > change that. purchase date? Wonderful if true. << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#3
07-05-2003, 03:24 AM
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| Re: How much is considered substantial? jared[at]hwai.com (Jared) wrote: - quote - > I am looking at rolling my mortgage over to a home equity
Why would you do this? If you already have a mortgage, why> loan. The principal would be greater than $100,000. IRS > Pub. 936 states that one of the conditions under which all > of the interest would be deductible would be if this were a > 'home acquisition loan'. The test would be if a substantial > portion were used to acquire or improve the home. My > question is, how little is defensible as 'substantial'? The > loan becomes much less attractive if I lose the tax > deduction for the amount over $100K. > Opinions? not simply refinance that loan to get the extra dollars you need for improvements? In such a case, all the interest would be deductible. A home equity loan greater than $100k would limit your deductible interest, regardless of what you do with the money. << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#2
07-05-2003, 03:05 AM
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| Re: How much is considered substantial? "Jared" <jared[at]hwai.com> wrote: - quote - > "Dave Woods, EA" <d.woods[at]verizon.net> wrote:
It's all home acquisition debt. Refinancing a mortgage is> > "Jared" <jared[at]hwai.com> wrote: > > > I am looking at rolling my mortgage over to a home equity > > > loan. The principal would be greater than $100,000. IRS > > > Pub. 936 states that one of the conditions under which all > > > of the interest would be deductible would be if this were a > > > 'home acquisition loan'. The test would be if a substantial > > > portion were used to acquire or improve the home. My > > > question is, how little is defensible as 'substantial'? The > > > loan becomes much less attractive if I lose the tax > > > deduction for the amount over $100K. > > Use common sense. How much do you owe, and how much debt > > are you looking to take out? > I owe approximately $160K. I guess I could borrow $180K and > redo our basement and master bath (two projects we have > planned for the next few years); if I did that and then made > a large repayment (the extra $20K), would that matter in > terms of qualifying the loan as home acq. loan or would I > have to prorate ($100K+interest on the $20K spent on > remodeling, losing out on the interest for the remaining > $60K), or would 1/3 of the nondeductible principal amount > spent on home improvement qualify the entire $80K overage? not a home equity line, and the facts you represent do not change that. -- David M. Woods, EA Boston, MA 02109 Postings here are general information only and not to be relied upon as advice. << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#1
07-04-2003, 09:59 AM
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| Re: How much is considered substantial? "Dave Woods, EA" <d.woods[at]verizon.net> wrote: - quote - > "Jared" <jared[at]hwai.com> wrote:
I owe approximately $160K. I guess I could borrow $180K and> > I am looking at rolling my mortgage over to a home equity > > loan. The principal would be greater than $100,000. IRS > > Pub. 936 states that one of the conditions under which all > > of the interest would be deductible would be if this were a > > 'home acquisition loan'. The test would be if a substantial > > portion were used to acquire or improve the home. My > > question is, how little is defensible as 'substantial'? The > > loan becomes much less attractive if I lose the tax > > deduction for the amount over $100K. > Use common sense. How much do you owe, and how much debt > are you looking to take out? redo our basement and master bath (two projects we have planned for the next few years); if I did that and then made a large repayment (the extra $20K), would that matter in terms of qualifying the loan as home acq. loan or would I have to prorate ($100K+interest on the $20K spent on remodeling, losing out on the interest for the remaining $60K), or would 1/3 of the nondeductible principal amount spent on home improvement qualify the entire $80K overage? << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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07-03-2003, 07:58 AM
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| Re: How much is considered substantial? "Jared" <jared[at]hwai.com> wrote: - quote - > I am looking at rolling my mortgage over to a home equity
Use common sense. How much do you owe, and how much debt> loan. The principal would be greater than $100,000. IRS > Pub. 936 states that one of the conditions under which all > of the interest would be deductible would be if this were a > 'home acquisition loan'. The test would be if a substantial > portion were used to acquire or improve the home. My > question is, how little is defensible as 'substantial'? The > loan becomes much less attractive if I lose the tax > deduction for the amount over $100K. are you looking to take out? -- David M. Woods, EA Boston, MA 02109 Postings here are general information only and not to be relied upon as advice. << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#-1
07-02-2003, 03:54 PM
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| How much is considered substantial? I am looking at rolling my mortgage over to a home equity loan. The principal would be greater than $100,000. IRS Pub. 936 states that one of the conditions under which all of the interest would be deductible would be if this were a 'home acquisition loan'. The test would be if a substantial portion were used to acquire or improve the home. My question is, how little is defensible as 'substantial'? The loan becomes much less attractive if I lose the tax deduction for the amount over $100K. Opinions? TIA - Kind regards, jh << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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