As I look at the two answers in this thread, they both are answering the same, once a loan is refinanced, the resulting loan will always be a refinanced loan.
To answer your question, it means A, was it EVER a result of refinancing the original loan.
When a loan is an original loan to buy or build a home, the program knows that all the interest is allowed as long as the loan balance is not over the limit.
When an original loan is refinanced, the program needs to know why it was refinanced.
If refinanced to take out cash, the program needs to ask a few more questions to determine if any of the interest needs to be limited because the loan was used for something in addition to buying the house.
Example, you took out a 200,000 to purchase a home in 2020.
In 2022, you refinanced this loan, now it is a refinanced loan forever.
If in 2022, the balance was 190,000 and you refinanced only to get a better rate, all the interest is allowed.
HOWEVER
In 2022, the balance was 190,000 and you refinanced and got a loan for 210,000 because the value of the house you bought increased, only the interest for part of the loan (190,000) is allowed. This limit on deductible interest for this refinanced loan will be forever, so every year you'll need to answer "Yes, it was a refinance of a previous loan"
@ZeZa
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
