If I refinanced my home last year, what should I enter on line C of the Home Mortgage Interest Worksheet?

[tammyo]

This is our primary residence, and we are not building or improving.  The refinance was just because there was a better rate.

[Vanessa A]

I am not sure which worksheet you are looking at, however, if you are being asked about your balance that was used to buy build or improve your home, if you simply refinanced for a better rate and the original loan was used strictly to buy, build or improve your home, then you will enter your full mortgage balance as long as you didn't take cash out to use for something else.

Refinancing for a better rate does not change the deductibility of a mortgage interest.  

[tammyo]

HI Vanessa,

@Vanessa A 

Thank you, I'm doing itemized deductions - form 1040, and on the home mortgage interest worksheet - I'm not sure if I should select yes or no.

For example - on line C

mortgage 1 - was the one refinanced in 2021, so do i say NO, and then note the outstanding principal?  

mortgage 2 - is my new mortgage that i got a better rate, so do i say NO, and then note the outstanding principal?  

Thanks,

Tammy

[PattiF]

For Line C in the Home Mortgage Interest worksheet, answer yes for the first mortgage. The help section that is shown below for the worksheet says that you don't need to answer the question. You can see this section by Clicking on Help Center in the Upper right corner while viewing the worksheet.

Line C: For a home equity loan (HELOC), answer Yes if all proceeds from the loan were used to pay for improvements to this home, or to pay off loans used to purchase or build this home. Otherwise, answer No.

For a refinanced loan, if no cash was ever taken out at the time of refinance, this question does not need to be answered. If cash was taken out, answer Yes only if the cash was used to pay for home improvements or to pay off other loans that were used to build, buy, or improve this home. If cash was used for any other purpose, answer No.

The amount used to buy, build, or improve a home (or "acquisition debt") is limited to the value of any new loan taken out. For a refinance, this can make it challenging to determine what amount is acquisition debt.
 

[tammyo]

thank you, question, it feels like it is asking me to fill something out when i go to review the tax return, so am I correct to just leave it blank for both?

[PattiF]

Yes, you could leave both of those blank.

[tammyo]

thank you so much, i appreciate it 🙂

[tammyo]

HI!  one more question - as I'm trying to wrap up and file the return - It will not let me file if i do not answer yes or no...I think I'm stuck...any advice?  Thanks again!  I appreciate it.  

[PattiF · Accepted solution]

Answering "Yes" for each mortgage would be appropriate since you didn't take out any cash.