Consolidating two mortgages on two houses into one mortgage on primary home.

[Gpa2022]

My wife and I own two homes.  Our primary home had $170,000 left on the mortgage and our second home had $100,000 left on the mortgage.  We refinanced and combined the mortgages into one $270,000 mortgage on our primary home.  In completing Turbo Tax, after marking that this is a refinance, it asks if the new loan was used for anything else besides paying off the existing loan.  I am trying to figure out how to answer the questions on Turbo Tax and it would be helpful to confirm that I am doing this correctly.

1) The loan is a refinance of a previous loan

2) On the question of whether we used the loan for anything other than paying off the existing loan - I think this is yes as we paid of the existing loan on the primary residence and the loan on the second house.

3) On the question of whether we used the money from this loan, exclusively on this home - I think this is also a no for the same reason that we used it to pay off the mortgage on the second home.

4) Next question on TT is: Since you first took out this loan, how much has been spent to buy, build or improve the home its secured by - Would this be the $170,000 that went to pay off the previous mortgage?

5) When I go to the State tax return - California - it has the entire loan as a non-acquisition debt which doesn't seem accurate as I would think that at least the $170,000 that was outstanding at the time we consolidated would be counted as part of the acquisition debt.

6)  Finally, it asks for the Fair Market Value on date debt was last secured by home.  Assuming that I just go on Zillow or Realtor.com and see current value of my home?

Thanks for explaining if I'm doing this correctly and how to think about this section.

First question:  Should this be yes because the new loan was used to pay off both the existing loan on the primary house and the remaining loan on the secondary house? or no because the new loan paid off loans that already existed (we did not take any money for other uses).

My thought is that we took out a $270,000 loan on our primary house (the consolidation of the two loans) and spent $170,000 paying off the existing loan on te

[Vanessa A · Accepted solution]

2) On the question of whether we used the loan for anything other than paying off the existing loan - I think this is yes as we paid of the existing loan on the primary residence and the loan on the second house.   You are correct this is a yes. 

3) On the question of whether we used the money from this loan, exclusively on this home - I think this is also a no for the same reason that we used it to pay off the mortgage on the second home.  You are correct this is a no

4) Next question on TT is: Since you first took out this loan, how much has been spent to buy, build or improve the home its secured by - Would this be the $170,000 that went to pay off the previous mortgage?  You are correct, it would be the $170,000

5) When I go to the State tax return - California - it has the entire loan as a non-acquisition debt which doesn't seem accurate as I would think that at least the $170,000 that was outstanding at the time we consolidated would be counted as part of the acquisition debt.  The $170,000 should be counted as part of the acquisition since it was used to buy/refinance your primary home that is securing the loan.

6)  Finally, it asks for the Fair Market Value on date debt was last secured by home.  Assuming that I just go on Zillow or Realtor.com and see current value of my home?  Was there an appraisal for the loan?  You should be able to find the FMV in the loan documents. 

Thanks for explaining if I'm doing this correctly and how to think about this section.  Yes, based on your answers above you are doing this correctly.