Home Mortgage Refinance for Divorce Payout

[2015blainev]

I got divorced about 12 years ago, mortgage on home at time was down to about $80K from $137K original purchase price. Home value had increased to about $425K at that time. I refinanced and paid ex about half that value less half of $80K mortgage balance. So based on new IRS rules would that mean that most of my current $160K mortgage interest is not deductible in 2019 since cash out went to the ex and not into my house in 2008?  

[DavidD66]

I would deduct the entire amount of interest.  When you refinanced, you effectively bought your ex-wife's interest in the property, so I would treat as 100% of the loan having been used to purchase your house.