If the loan on Home A paid for Home B, the interest is not considered as Home Mortgage Interest.
The loan must be secured by the property, so in order to take interest as a Home Mortgage Interest deduction, the mortgage would have had to be taken out on the new property. Interest on a HELOC (Home Equity Line Of Credit) may only be deducted if it was used to improve that home, not a different home.
According to the IRS:
“Home acquisition debt is a mortgage you took out after October 13, 1987, to buy, build, or substantially improve a qualified home (your main or second home). It must also be secured by that home.”
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