Hello stan_sd,
I would like to address your issue on TurboTax allowing the $100,000 in home equity debt. Per Publication 936, page 10 for Home Equity Debt - ignore the first sentence and pay attention to the second sentence, "In addition, debt you incurred to buy, build, or substantially improve your home, to the extent it is more than the home acquisition debt limit ($1,000,000), may qualify as home equity debt. Home equity debt is a mortgage you took out after October 13, 1987, that: 1) Doesn't qualify as home acquisition debt or as grandfathered debt, and 2) Is secured by your qualified home." As an example, let's say your mortgage loan is $1,200,000 and the limit is $1,000,000. The remaining $200,000 may qualify as home equity debt, since it exceeds the limit and does not qualify as home acquisition debt. (Home acquisition debt limit: $1,000,000 - debt over this limit may qualify as home equity debt.) TurboTax is correctly calculating the $100,000 limit for home equity debt (the smaller of the $200,000 loan excess which didn't qualify as home acquisition debt or the $1,000,000 limit) since the rules state that the amount that doesn't qualify for home acquisition debt may now qualify as home equity debt. It doesn't matter that there is no HELOC, what matters is that excess does not qualify as home acquisition debt, but instead as home equity debt. I hope this helps!
