How do I consider home depreciation in office expenses when technically my home "cost" went up because of a cash-out refinance we did?

[cccbassman14]

So I should not update the "cost" part of the home to the new mortgage total figure?

[Critter · Accepted solution]

Your cost basis for depreciation doesn't change just because you took out a HELOC.    What that will change is the mortgage interest expense. 

[Bees]

You are allocating costs for the office based on sq ft ratio of office to the total home. The interest expense number will be different .  Interesting point that the cash out portion should not be attributed to the house costs even though it is tax deductible.  Moot point after 2017 .