Can I roll my HELOC into a First Mortgage and deduct all the interest under the new law?

[Critter]

Hence the "grey" area of the tax law.

[Carl]

"These could easily be called repairs"
Actually, no they couldn't easily be called repairs. But they could easily be called property improvements, which add to the cost basis of the property. There's a vast defined difference between a repair and a property improvement. In fact, for major repairs such as those you mentioned above, are no problem claiming as a property improvement, since the "repair" meets the definition and fulfills the requirements to be declared a property improvement.

Property Improvement.
Property improvements are expenses you incur that add value to the property. It does not matter if it was your residence or a rental at the time of the improvement. It still adds value to the property.
To be classified as a property improvement, two criteria must be met:
1) The improvement must become "a material part of" the property. For example, remodeling the bathroom, new cabinets or appliances in the kitchen. New carpet. Replacing that old Central Air unit. New roof.
2) The improvement must add "real" value to the property. In other words, when  the property is appraised by a qualified, certified, licensed property appraiser, he will appraise it at a higher value, than he would have without the improvements.

Repair
Those expenses incurred to return the property or it's assets to the same useable condition they were in, prior to the event that caused the property or asset to be unusable.

[MattB]

I'm happy that they are considered property improvements, but it still sounds more gray than "vast difference" to me.  

Using a new roof as an example, I can argue that it meets both your definition of property improvement and your definition of repair.  

It is a property improvement because it is definitely a material part of the house, and it will definitely appraise at a higher value with a brand new roof than with an old, falling apart roof.

It is also a repair using your definition since the old, falling apart roof was once a new roof, and replacing it is simply returning the property to the same usable condition it was in before the roof became old and started falling apart.

Is the difference that the "event" in your repair definition is intended to be a sudden incident like a storm, fire, etc., as opposed to slow deterioration over time?

[Carl]

" I can argue that it meets both your definition " I don't and can't write tax law. I'm not even the determining authority for the interpretation of tax law. I'm not going to debate this. But you can feel free to do so with the IRS or better yet, a federal judge who has the authority to interpret, and even change tax law. I can tell you this though. If you claim a $10K property improvement as a repair expense, you can expect to be audited about 24-36 months after you file the return, and you will lose on the audit. I've been a landlord myself for 25 plus years. Been there, done that, got the T-shirt.

[MattB]

I was asking a serious question, simply trying to better understand the answer to the earlier poster's question about what activities could be considered a remodel, property improvement, etc. for purposes of Home Equity Loan/HELOC/Refinance interest deductibility.  I wasn't being snarky, or trying to debate for the fun of it or to piss you off.  I apologize if it came across that way.  I have no intention or desire to debate this with the IRS, a judge, or anyone else.  I simply wanted to improve my understanding of where the line is between home improvements and repairs before I fund them with a Home Equity loan.