Scenario:
- Cash out refinance in 2021
- Original loan had a balance of $300k
- Refinanced for $450k ($150k cash back)
- Received 2 1098's (original mortgage and refinance mortgage)
- Cash received during the refinance was not used for improvements to home (used for other things)
In TuboTax, on the refinance 1098, I answered yes to:
- Is this loan a home equity line of credit (HELOC) or a refinance of a previous loan?
- Did you take cash out when you got this loan?
Then on the question "Have you used the money from this loan exclusively on this home?" answered:
"No, I used some or all of this loan on a different home or something other than a home."
I am now confused what to enter on the following items:
- What was the original amount of the loan?
- Should this be the original loan payoff of $300k or the refinance loan amount of $450k?
- When I entered the refinance loan amount of $450k, it said the interest wasn't deductible. Seems like the form questions aren't really entirely accurate.
- How much of your loan did you use to build, remodel, or repair the property it's secured by?
- Since I did not "build, remodel, or repair", I assume this should be zero.
- In other discussion posts, I've seen mention of "buy, build, or improve". Did "buy" get erroneously dropped from the question text and I should enter $300k here?
Can a tax expert please provide guidance?
