Mortgage Interest Deduction Question for Home Mortgage Refi

[environmentalguru]

In the mortgage interest deduction section in TurboTax, it reads, "Since you first took out this loan, how much has been spent to buy, improve, or build the home it's secured by?" Is this question asking how much I have spent to pay off  the mortgage refi loan ("buy the home") since I closed on the loan? Is it also asking how much have I spent on improving the home since I closed on the refi loan?

[SharonD007]

It's asking how much of the money you used from your refinance to improve your home. You can deduct mortgage interest when the loan proceeds are used to buy, build, or improve your main home and one other home you own and use for personal purposes.

Refer to the TurboTax article Mortgage Interest Deduction: How Does it Work? for additional information.

[environmentalguru]

To clarify, do we deduct the amount that was spent to pay off other debt from the amount of the mortgage refi to obtain the answer to "Since you first took out this loan, how much has been spent to buy, improve, or build the home it's secured by?" If we didn't use any of the mortgage refi proceeds to improve the home when we closed on the loan, do we enter zero for this question. I am not sure what they mean by "buy." How can you use the mortgage refi proceeds to buy the same home that the loan is secured by?

[KrisD15]

Yes, subtract the amount used for something other than the house. 

Example, you take out a 325,000 loan to buy a house. 

When the loan balance is down to 300,000, you refinance for 350,000 to pay off loans and buy a car. 

You would subtract the 50,000 you took out from the 350,000 refinance and enter 300,000. 

300,000 is what you still owe for buying the house in the first place. 

[zomboo]

In replying to "Since you first took out this loan, how much has been spent to buy, improve, or build the home it's secured by?", you need to include the original purchase cost of the the first mortgage plus the cost of any improvements made with funds from the refinance. The term 'this loan' means the original mortgage and the refinance taken together. For example, if you purchased the home for $350K and after paying some of the principle down, refinanced for $300K, the answer is still $350K. If you took out $50K with the refinance and used it to improve the home, the answer would be $350K + $50K = $400K.