“This loan” applies to the Form 1098 you are entering into TurboTax at that point. If you only have one mortgage, then you would select Yes, this is a loan I've refinanced or a home equity line of credit (HELOC) if this loan was refinanced in 2019.
TurboTax asks this because your mortgage interest deduction may be limited.
You can only deduct the interest from the amount of your loan that's been used to buy, build, or substantially improve the home that it's secured by — meaning the property that acts as collateral for the loan to protect the lender.
If you've ever used part of this loan to pay for things other than this home, you can't deduct the interest from that amount of the loan, even if the transaction didn't take place this year.
Examples of common ways you might have used this money not on your home include:
- Making a down payment on a different home
- Funding improvements on a different home
- Making a payment on a different loan or debt
- Having miscellaneous large purchases
Example: John took out a home equity line of credit on his main home on for $40,000. He used $25,000 to remodel his main home, and $15,000 as a down payment on a second home. He can only deduct the interest he paid on $25,000 he used to improve his main home.
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