If the loan was closed on or before December 15, 2017, you can deduct interest on up to $1 million of acquisition debt. If the loan was refinanced and the current loan closed after December 15, 2017, the limit is $750,000.
Interest on equity debt is no longer deductible no matter when you took out the loan.
Acquisition debt is debt used to buy, build, or substantially improve your home.
For example: You buy a home for $600,000 in 2013 with an $540,000 mortgage. In 2018, your mortgage balance is paid down to $500,000. You refinance for $750,000 and use $50,000 for remodeling. Your acquisition debt is (500K+50K) = $550,000, so you can only deduct 550/750th or 73% of your interest, even though the total mortgage amount is still under the $750,000 or $1 million limits.
It doesn't matter if you got a new refinanced mortgage, or if you kept the original mortgage and took out an HELOC Either way, you now have $750,000 of total debt, of which $550,000 is acquisition debt and $200,000 is equity debt.
