Hello community,
I took out a fixed rate second on my home in 2019. The money was deposited in my bank account and I paid interest on the money, but I did not use the money. Am I able to deduct the interest paid?
If in 2020 I use a small portion of the money to make a purchase that does not "buy, build, or improve my home" am I able to deduct the interest pain on the remaining, unused amount?
Am I able to repay the small portion used above and "start over" at the full amount to improve my home and be able to claim the full amount as a deduction?
As an example:
Let's say I took out $20000 out through a fixed rate second mortgage and this money was put in the bank. Interest is paid on this money. I did not use any of the money in 2019.
In 2020, I used $4000 to buy an inexpensive car in a pinch. Through other means, this money was quickly repaid putting the funds available back to $20000.
How much interest can I deduct for 2019? 2020?
Or does the deduction only apply to interest on money actually spent?
Most of the discussion I see involves a HELOC which is a different situation as that is similar to a credit card.
I have searched everywhere but cannot find an answer to my specific scenario.
About to file but am getting hung up on this one issue.
Thank you!
