Change the Home Acquisition Debt Number

[dwheat17]

Under California Home Mortgage Loan Balance Information the Home Acquisition debt number is wrong.

It prefilled Home acquisition debt of $400,000. That was last year’s number.  This year I took out money from an existing HELOC and used $50,000 for home improvements.

However Turbo Tax says that my total home acquisition debt at the end of the year is the still ($400,000).

I understand that that number cannot be changed int the State portion of Turbo Tax

How do I change that number so that it is correct? (i.e., $450,000).

[dwheat17]

Any help on this would be appreciated as the solution does not seem to be documented anywhere.

[MarilynG1]

Did you report a Form 1098 for your HELOC separately in your Federal Return?  If so, did you indicate that the funds were used 'to buy, build, or improve your main home'?

If not, you can report the 50K under Mortgage Interest Not Reported on Form 1098.  If you're using TurboTax Desktop, you should then have a Home Mortgage Interest Worksheet created.

Or, If you have an original 1098 with the original mortgage information, combine your Heloc information in the original 1098. Add the interest paid on the Heloc to the amount in Box 1, if you used to entire funds of the loan to buy or improve your home.

Here's more info on Reporting a HELOC.

@dwheat17 

[dwheat17]

Thank you.  That was it.

On Home the Home Mortgage Interest Worksheet I have one more question.

• Let's say that the cost basis of my home is 400k. 

Over the years I have paid down the HELOC and put more improvements on it.  For example, 

• I put 50,000 on the HELOC for home improvements. 
• I then paid off 25k of the HELOC. 
• Next, I put another 50k on the HELOC for home improvements.

So now I have a balance of $75k on the HELOC.

The way I see it, the cost basis for my house is now 500k.

In order to achieve this though I need to have acquisition debt on my HELOC of 100k, even though the current balance is only 75K.

Is this correct?

[DMarkM1]

No.  The current balances on your mortgage debt are not factors in your home's cost basis.  Whatever costs you actually paid for improvements is added to your cost basis based on your tracking of those costs over the years.  When you sell the home you put in the cost basis as part of the home sale entries.  

So only when you use the line of credit to pay for improvements is your cost basis affected.   So you could have a current balance of 25K on the HELOC but have paid more than 100K in past years for improvements that increased your cost basis.