Deductions & credits

You are going to have to do a bit of math on this one.  The interest that would be deductible is the interest that was paid on the $100K that still remains as part of your balance.

Your mortgage balance in 2017 would have been less than the $100,000.  So, you will need to obtain that number in order to do all of the calculations. 

An example of how to calculate this number is below. 

If you refinanced your home in 2017, with a balance on your mortgage of $70,000 and brought your mortgage balance back up to $700,000, then you would only be able to deduct 10% (70k/700k=10%) of the mortgage interest as only 10% of the balance was used to buy, build or improve your home.

Since you refinanced again, that 10% was diluted even further.  If in 2018 right before your new refinance was $650,000, then only $65,000 (10% still) would be used to buy build or substantially improve your home.  So, when you refinance and have a new balance of $900K, only 7.222% (65,000/900,000=.07222) would be allocable to the original mortgage balance. 

With no further refinancing, this means 7.222% of your principal and interest was used to buy, build or substantially improve your home.  So, you could only deduct 7.22% of your interest paid for the current tax year. 

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