Deductions & credits
Yes, thanks @smileyborg. That's correct. I was writing a similar reply at the same time.
- In 2009 the IRS issued a memo to give guidance on this issue. They said, "Indebtedness incurred by a taxpayer to acquire, construct, or substantially improve a qualified residence can constitute home equity indebtedness to the extent it exceeds $1 million (subject to the $100,000 and fair market value limitations imposed on home equity indebtedness by § 163(h)(3)(C))".
- Previously, this applies to both Federal and CA, and there's no difference.
- The Tax Cuts and Jobs Act (TCJA) signed into law on December 22, 2017 limited the federal home equity indebtedness deduction.
- The CA FTB clarified that CA does not conform to these changes, leaving the previous status quo. It says, Federal law suspended the deduction on up to $100,000 ($50,000 for married filing separately) for interest on home equity indebtedness... California does not conform. If your deduction was limited under the federal law, enter an adjustment on line 8, column C for the amount over the federal limit."
Furthermore, the CA adjustment functionality worked in TurboTax online for TY2021, TY2020, TY2019, etc. So something broke.
