In 2019, I bought a house for $380k with a first mortgage of $300k (80% LTV / 20% down). I then invested $250k to renovate the house. It reappraised for $500k after the renovations so in 2020, I refinanced at 75% LTV for a new mortgage of $375k. After closing costs and paying off original $300k mortgage, I walked away with $60k cash. I did not need the $60k for improvements cause I already spent $250k so does the fact the $60k "cash out" money had already been spent (within the $250k) mean I cannot deduct 100% of my 2021 mortgage interest? Turbo tax is not calculating any deduction from the $12k in interest I paid in 2021.
