kamlet[at]panix.com (Arthur Kamlet) wrote in
news:gli2g7$8n1$1[at]reader1.panix.com:

- quote -

Thanks. The situation is quite complex.
Our current home is our second primary residence. The first home was
sold soon after I moved to this one (in 1998).

I paid for the current home with financing using a second mortgage on
the first home, plus a TIAA loan. Then I paid off the heloc on the
first home and got a second mortgage/HELOC on the new home, and paid off
the TIAA loan. This HELOC was also with in mind the ~85K of remodeling
and associated costs we intended.

The HELOC was refinanced twice during the last 10 years. So it is
really confusing to say what is acquisition debt on the current HELOC,
which is why I have stayed under 100K indebtedness. Family reasons, as
well as repairs/improvements to this house now suggest I go over the
100K limit, hence all my questions.

--
Best regards
Han
email address is invalid

--
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JoeTaxpayer wrote:
- quote -

To clarify, just because it is not an eligible mortgage for purposes of
AMT does not mean the interest is not deductible under AMT. In a
refinance, the interest on the amount of the new loan that does not
exceed the lowest balance of the original eligible mortgage is still
deductible for AMT.

(This reminds me of a similar counter-intuitive use of language
regarding Roth IRAs, in which a non-qualified distribution can still be
complete tax- and penalty-free. Terms like "non-qualified" and "not
eligible" are not always necessarily bad in tax terms).

- quote -



-Mark Bole

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Bob Brown wrote:

- quote -

From the instruction for form 6215:

"Eligible mortgage. An eligible is a mortgage whose proceeds were used
to buy, build, or improve your main home or a second home that is a
qualified dwelling. A mortgage whose proceeds were used to refinance
another mortgage is not an eligible mortgage."

I trust this means another, as in a third home, not the original home
refinanced thru a HELOC. Bob, you are correct, the non-home interest can
impact AMT figures. (I corrected your quote to clarify your intent)
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. > << ------------------------------------------------------- >

I agree with this answer but with the warning that the 67K has to be
added back too taxable income when calculating AMT. It might turn out
that this is enough to generate some AMT.

Bob B



On Sun, 25 Jan 2009 09:51:30 EST, JoeTaxpayer
<JoeTaxpayer[at]comcast.net> wrote:

- quote -

========================================= MODERATOR'S COMMENT:
Are you sure the loan amount has to be added to AMT income,
not just the interest on HEL principal?

--
<< ------------------------------------------------------- > << 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 <Xns9B9E6E5739412ikkezelf[at]199.45.49.11> ,
Han <nobody[at]nospam.not> wrote:
- quote -


I think you are asking about a refinance? If so, the refinanced
loan retains the same character as the original loan.


If some of the new loan replaces home acquisition debt, consider it as
home acquisition debt.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

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<< ------------------------------------------------------- > << 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]comcast.net> wrote in
news:glhu8q$mas$1[at]news.motzarella.org:

- quote -

wat counts as remodeling/acquisition debt, and 100K on top of that is
what should be considered as allowed for reasons of interest deduction.
Great!

--
Best regards
Han
email address is invalid

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

kamlet[at]panix.com (Arthur Kamlet) wrote in news:gli19g$maf$1
[at]reader1.panix.com:

- quote -

Is that trace as original buying, building or remodeling costs, or do I
have to take into account how far I paid down those debts over the years?

--
Best regards
Han
email address is invalid

--
<< ------------------------------------------------------- > << 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 <Xns9B9E55333EF86ikkezelf[at]199.45.49.11> ,
Han <nobody[at]nospam.not> wrote:
- quote -


Even if this was a HELOC, the portion of the loan you can trace to
buying, building or remodeling may be treated as Acquisition debt, with
a $1million principal limit. The rest is home equity debt, with a
100,000 limit.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

Han wrote:
- quote -

This is one time I'll offer the way I read the IRS wording with the
warning that I am not certain. I'm sure others will chime in and offer a
stronger opinion. Reading http://www.irs.gov/taxtopics/tc505.html :

I believe that with a good paper trail, 75K is attributable to the
remodeling, and 67K (which can go up to 100K) is considered the 'other'
HELOC debt you can deduct.

In other words, I read the wording in the reference that so long as you
can show that no more than 100K is 'personal' HELOC debt, it's all
deductible. Had you paid the HELOC to zero, and now borrowed $142K, only
$100K is deducted.

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. > << ------------------------------------------------------- >

I paid off a large part of a mortgage, then acquired a home equity loan of
credit for remodeling, and paid much of that off, so that eventually the
first mortgage had disappeared.

Now I need to take a considerable amount of money out of the HELOC. I can
attribute 27K of the HELOC as original acquisition debt and 115 K as
remodeling costs.

I had paid off the HELOC down to 75K, but now need to take out 67K more
(total to be outstanding 142K). Question is with these numbers, is the
interest on 142K deductible? Or only up to 100K?

--
Best regards
Han
email address is invalid

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >