Yes, once a loan is refinanced, it will forever be a refinanced loan.
There were recent changes to the Home Mortgage Interest Deduction.
There are limits depending on
1. The loan balance
2. If the total loan amount is attributed to the house and only the house
So what does this mean?
If you sign an mortgage note at closing, we all know that the total loan was used for the "building of, purchase of, or Improvement of" the house.
No other questions needed.
If in a year after closing, you refinance the loan-
If you don't take cash out (maybe you just refinanced to get a better rate) all the interest is allowed
If you DO take cash out
1. and you use the cash to improve the house, perhaps to add on a room, all the interest is allowed
2. and you use it for something unrelated to the house, to buy a car for example, SOME of the interest is allowed. In this case the program needs to make a calculation
If the program needs to make a calculation, it will need to do a calculation every year, so every year TurboTax will ask, and if you have EVER refinanced, you will say "Yes" it is a refinanced loan and then TurboTax will ask you the same questions about taking out cash, what did you use the cash for,,, year after year until you sell or pay off the loan. (or until Lenders are required to list that information on Form 1098)
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