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Returning Member
posted Jan 29, 2022 1:11:21 PM

Can I deduct mortgage interest used to payoff an existing mortgage...

I had a loan on my home for $150,000 - I'll call it Property A. In 2020 inherited another property that had no debit - I'll call it Property B.

 

In 2020 I moved into Property B and made it my primary residence. In 2021 took a loan on Property B for $200,000 to pay off Property A and make improvements to Property B. The new lender issued a check to the other lender to close the loan on Property A and issued me a check for the remainder. 

 

Since $150,000 of the new loan was used to pay off another debit (Property A), do I lose the mortgage interest deduction on that loan?       

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1 Replies
Expert Alumni
Jan 31, 2022 2:33:43 PM

Nope, you're all good.

 

The IRS allows a qualifying mortgage interest deduction on loans secured by the property of a first or second home up to $700,000.  Nothing in your question would seem to disqualify you.

 

The deduction can get super complicated so if you have a bunch of other factors that aren't in your question be sure to check the IRS out here.