Cash out refinance not used yet

[andreaskip]

I refinanced in 2020 with a cash out, but haven't done the improvements i planned yet.  The money is currently in a savings account.  Do I base the tax deduction on having done capital improvements because that is the plan, or is it considered used as other until i spend it?

[NCperson · Accepted solution]

if you cashout prior to spending the money on improvements, then it is not tax deductible until you spend the money.  Technically, even if you cashout on a Monday and don't spend the money until Tuesday, that first day's interest is not tax deductible.

if you do it the other way around and spend the money from other sources first and then cashout the equity,  the interest is deductible from Day 1.