I am trying to determine if the home equity loan that I took out is mixed-use and how do I enter it into Turbo Tax Premier so that it is reported correctly. I took out a $175,000 home equity loan, secured by my main home, on property with FMV greater than $200,000. $85,000 was used to pay off my original mortgage. $90,000 was used to pay off school loans. I don't make enough money to have any itemized deductions phased out.I know the $90,000 is equity debt and as long as it is under $100,000, then the interest on that part of the loan is fully deductible. I do not have any other mortgages.
(1) First is the $85,000 considered acquisition debt and therefore all interest is deductible?
(2) If I have categorized both types of debt correctly, how do I enter this into Turbo Tax. Publication 936 shows all kinds of average principle balance calculations for the different kinds of dept, but Turbo Tax is not asking questions like that. It simple ask how much interest was shown on the 1098 and does not break it out between dept types.
You can deduct the full amount of your mortgage interest.
As long as your home is security for the debt, in other words, if you don't pay they get the house, your combined refinanced acquisition debt (money used to buy, build or improve the home) and home equity debt (money used for anything else) does not exceed certain limits you can deduct the full amount of the mortgage interest.
Clarification: Publication 936
In your example you are correct - acquisition debt is $85,000.
The home equity debt is $90,000 which is less than the maximum $100,000 and the home's value less acquisition debt ($200,000 less $85,000 = $115,000)
To record your mortgage interest and mortgage insurance premiums if applicable you can use the steps below.
1. Sign into your TurboTax account (online or desktop) and select your return.
2. Use the Search box in the upper right
3. Search for mortgage interest
4. Jump to mortgage interest (see image attached)
5. Begin the entry of your mortgage interest (see image attached)
(Edited: 03.18.2017 | 10:07a PST)