I know everyone including tax experts and even Turbo Tax believe the $1M acquisition debt limit for pre-2017 mortgages applies when the pre-2017 mortgage is refinanced after December 2017. My question is how did this become the accepted norm?
Pub 936 classifies mortgage debt as either Grandfathered Debt or Acquisition Debt. Acquisition Debt is debt that originated after October 13, 1987. The publication sets acquisition debt limit at $1M for mortgages originating after Oct 13, 1987 and before Dec 16, 2017 and $750K for mortgages originating after after Dec 15, 2017.
Pub 936 states 'Any secured debt you use to refinance home acquisition debt is treated as home acquisition debt.' but it does not state the refinancing mortgage retains the acquisition debt limit of the original mortgage. The refinancing luxuries of Grandfathered debt are not provided for Acquisition debt in Pub 936.
I am asking for anyone, especially experts, to explain how I am getting this wrong.
