"Ken B. Winger" <kbwing[at]comcast.net> wrote:

- quote -

1) No. Home equity interest is only deductible to $100k of
home equity debt. You cannot consider the 2nd mtg as
anything other than home equity as it was not used to
refinance an existing qualified mortgage.
2) Yes.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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- quote -

In 2002, when the original mortgage was paid off, the entire
acquisition debt disappeared.

The new mortgage for $135,000 is (as you say) all home
equity debt. Therefore, only interest on the first $100,000
of debt is deductible. 100,000/135,000 X 3,700 should be
the amount of deductible interest. The interest on the
second mortgage would not be deductible at all.

Mary Ann Thomas, EA in AZ

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"Ken B. Winger" <kbwing[at]comcast.net> writes:

- quote -

I'm going to assume that this is the same property as in
B&C. IOW, as of this payoff there was no debt secured by
the property.

- quote -

No. The limit is interest on $100K of home equity debt.
Since there was no acquisition debt on the property in 2003,
both B&C are home equity debt, and the limit applies.

Phil Marti
Clarksburg, MD

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Ken B. Winger wrote:

- quote -

If (A), (B), and (C) all refer to the same home with the
same taxpayer as owner, and that taxpayer owned the home
throughout the period of interest, then (B) and (C)
constitute non-acquisition debt, so that only that interest
corresponding to $100,000 in principal is deductible on
Schedule A.

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Facts: Personal Home - FMV 280k

(A) Original Mtg balance of $217k acquired prior to 87, paid
off in 2002 with SmithBarney Credit Line secured by
securities.

(B) Acquired 2003 - 1st Mtg Secured by Home - 135k -
Interest Pd $3,700

(C) Acquired 2003 - 2nd Mtg Secured by Home - Home Equity
Line of Credit - 99k - Interest Pd $386

Q1: Wouldn't Interest pd in 2003 of $4,086 be deductible on
Sch A?

Q2: Is not both (B) and (C) considered Home Equity debt?

Thanks for your assistance.

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