Rainman, I had this exact same question at least two years in a row and I can't recall what I decided last year.
ErnieS0, you said "“This loan” applies to the Form 1098 you are entering into TurboTax at that point." But in my case, the form I'm entering is itself a refinance. Therefore neither of the two choices Turbotax provides are accurate:
Yes, this is a loan I've refinanced or a home equity line of credit (HELOC).
No, this is the original loan I used to buy or build my home.
I have never refinanced this loan, but it's also not the original loan I used to buy my home. The wording really needs clarifying in my opinion. The pop-up help box, like a lot of them this year, was blank and therefore useless.
Now, about your next statement:
"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 I'm reading you correctly, I can deduct the interest from the total amount of the loan, even though it's a refi, because it was all used to buy my home (well, and to pay for the loan itself -- all the settlement charges). For that reason I'm assuming I can say this is the original loan I used to buy my home. Correct? I think that's what I chose last year, too.
