"AES" <siegman[at]stanford.edu> wrote
- quote -

What Phil said regarding the $100k, plus a caveat regarding
fair market value of the house and its mortgages per
http://www.irs.gov/taxtopics/tc505.html (double check with
Pub. 536). After meeting these tests, it seems to me a
person could do as you propose.

Phil--I think it is more "thanks to Joe" for pointing this
out. It seems to be the one exception to where one can spend
a HEL and still possibly have the HEL's interest be
deductable. I missed it in another recent thread on
deductability of HEL interest.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Elle wrote:
- quote -

Beautiful. My thanks, as always, Elle.
Joe

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"AES" wrote:

- quote -

I believe you assume incorrectly. Interest on home equity debt in excess of
$100,000 is not deductible under any circumstances unless it qualifies as
investment debt, which your scenario does not.

A side note of thanks to Elle for correcting my earlier response. They sure
managed to hide that one, both in the Pub and in the Code.

--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Mar 31, 5:20*am, joetaxpayer <joetaxpa...[at]nospam.com> wrote:
- quote -

"If you borrow money to buy property you hold
for investment, the interest you pay is invest-
ment interest. You can deduct investment inter-
est subject to the limit discussed later. However,
you cannot deduct interest you incurred to pro-
duce tax-exempt income."

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <O%7Ij.79852$497.46410[at]newsfe14.phx> ,
"Elle" <honda.lioness[at]spamnocox.net> wrote:

- quote -

But I assume the interest on a home-secured HELOC over $100K should
continue to be deductible if one is retired, 70+, living on withdrawals
from tax-deferred IRAs (non-annuitized), and using occasional
withdrawals from that HELOC to supplement the mandatory minimum
withdrawals each year? -- objective of this exercise being to keep
maximum amount exarning in the tax-deferred IRA accounts.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"joetaxpayer" <joetaxpayer[at]nospam.com> wrote
- quote -

Pub. 936, page 4 confirms what you say. Specifically, a
HEL's interest is not deductible if one uses the proceeds of
the loan to buy securities or certificates that produce
tax-free income.

I see the IRS web sites I cited earlier in another thread do
not explicitly include this exception. One has to read Pub.
936 for the fine print.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"joetaxpayer" wrote:

- quote -

It depends on what kind of borrowing is involved. You can deduct the
interest on a qualified loan against home equity up to $100,000 and blow the
whole thing on Twinkies if you like. (Publication 936)

Otherwise you're talking about investment interest, which does require
tracking. Publication 550 is a starting point.

--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

I remarked to someone that I was pretty sure that one cannot borrow
money (and deduct the interest) if the proceeds are used to buy tax-free
bonds or tax free bond funds. I am certain that at one point in time
that was true, but now I am unable to find a reference to an IRS reg
stating this. Can someone confirm this with a reference I can pass along?
Joe
www.blog.joetaxpayer.com

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >