On Feb 23, 8:49*pm, kam...[at]panix.com (Arthur Kamlet) wrote:
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home for $1 million, so only $100K of the heloc is deductable even if
considered home acquisition debt.

- quote -

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Actor123 wrote:
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In addition to Art Kamlet's reply, see also recent thread "Mortgage
Interest deduction limit for HELOC".

IRS Pub 936 gives detailed instructions and "Table 1. Worksheet To
Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest
For the Current Year", but you need to be a competent spreadsheet jockey
with excellent historical records and a fair amount of time on your
hands to do it correctly, IMO.

-Mark Bole

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In article <207689f0-8899-4e08-894a-9d81f5a13477[at]v15g2000yqn.googlegroups.com> ,
Actor123 <actr123[at]aol.com> wrote:
- quote -


Back to basics:

A mortgage is a loan secured by your home.

Mortgage principal used to buy, build or improve your home is
Home Acquisition Debt.

Mortgage Principal used for other purposes is Home Equity Debt.


So in spite of having obtained what the bank called a Home Equity
LOC or loan, since you say you used the proceeds to remodel your
home, which I assume means a capital improvement, not a simple
paint job, it is home acquisition debt, subject to the $1 million
of principal rule.
--


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

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Here is the situation: Home equity line is for $350,000. During the
course of the tax year, the amount borrowed on the line varied from $0
to $300,000 (basically increasing as the year went on during the
course of a remodel). The entire amount is attributable to home
remodel. I know that the maximum amount of $100,000 applies to this
line, but I'm having trouble figuring out how to prorate the yearly
interest based on this. I mean, if it was a fixed loan for $300,000 I
would just divide the yearly interest by 3, but here we have a
situation where the amount borrowed actually varied throughout the
year. How exactly am I supposed to prorate it? Should I just take
the average of the starting and ending amounts of the line (0 and
$300,000) and divide by 2 to estimate the average balance for the
year, or do I need to go in by monthly statements (none of which I
still have)?

Thanks in advance

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