House 1:
Bought house in 2000
Refinanced in March 2012
Lived here until July 2020
Jan 2020 Balance: 109,388.09
Dec 2020 Balance 104,949.29
on house 1 the allowable interest is based on the original loan balance on the date of refinancing. so if original loan balance was $50,000 when you refied. only interest on $50,000 of the rfi is allowable mortgage interest,
so if it you took cash out on the refi. that part may be nondeductible
House 2:
Bought in March 2020
Moved in in July 2020
Have yet to sell house 1, it is vacant.
Beginning balance 540,000
Refinanced in October 2020
Beginning balance for new loan 404,000 I paid the mortgage down a bit during refinancing.
Dec 2020 balance 403,269.14
there should be no issues with the mortgage on the new home. your total mortgages at any one time in 2020 were less than $750,000
and yes you had 3 mortgages.
the refi on the first.
the original mortgage on the second
and the refi on the second.
under current law, if you refi a mortgage for more than the remaining balance on it, that portion of interest may be non-deductible. it is ok to refi for more to pay for improvements. there's even the possibility if you cash out, the interest on the cash out portion could be deductible if used to buy investment property but not for a 3rd house or if used to pay down credit card debt or other personal purposes.
