Cash- Out Refinance

terrie — Tue, 16 Mar 2021 23:28:53 GMT

Refinanced a $530,214 mortgage at the end of 2019 to include cash out of $328,654. New mortgage is now $858,868 at an interest rate of 4.5%. The cash out was not used for home improvements. My Form 1098 from new lender shows total interest paid for 2020 based on the entire $858,868. I know I cannot deduct interest on the cash out of $323,654, but can I deduct interest on the $530,214? How would I figure out how much interest to deduct and how would I do this on turbo tax? Turbo tax only asks for total interest and if any portion of cash out was used for home improvements. When I answer that the cash out was not used for home improvements, it appears to now allow any write off of any portion of the loan.

Re: Cash- Out Refinance

NCperson — Sat, 27 Mar 2021 18:50:41 GMT

it is rather simple:

that part that is deductible is the $530,000 / $859,000 times the total interest.

each year you will do that same calculation and as the $859,000 amortizes, a higher percentage of the interest will be deductible.

I would just enter the result of the calculation into turbo tax and then answer that there was no cash out.

topic Cash- Out Refinance in Home loans

Cash- Out Refinance

Re: Cash- Out Refinance