I refinanced my home in october 2021 including a payoff of a heloc loan. I did not receive a 1098 from the heloc loaner (because the interest was <$600).
When completing the forms on TurboTax, it asks me if i took out extra money - yes
Did i use it for improvement - not yet. The loan only closed in october and i have not yet had time to use the money for repairs. so i cannot say how much will be towards improvement. The answer is just a yes i've used this on the home i took it out on
and NO: i used some or all ....... something other than a home.
it could be yes, i will use it in the future. But no, i can't promise that will not use it. It is sitting in a bank right now. how do i answer this?
If you answer that it was all for home improvements then you get to deduct the interest. If not, you don't. You'll have to make a judgement call on this one. And you'll have to answer it again next year.
this is actually a little more complicated - because there was a HELOC that was paid off.
the acquisition debt is the original loan balance used to purchase the house.
Then it appears there was a HELOC - what did you use that money for? home improvement or not?
then it appears you did a cash out refi and paid off the 1st mortgage and the HELOC and you have yet to use the cashout money for improvement.
Let's say the original aquisition debt was $100,000 and had amortized down to $90,000 at the time of the cash out. Further, the HELOC has a balance of $25,000. Then the cash out refi was a new $150,000 loan.
In this example, the interest on the first $90,000 is clearly deductible interest. The interest on the remaining $60,000 (including the HELOC interest prior to the payoff) is not tax deductible, unless the momey was used to improve the house. It could be some of that $60,000 is used to improve the home and at that point, the related interest is tax deductible.