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Mortgage interest refinance

Can you all help me with a question?

I purchased my home in 2015 so I believe my acquisition debt is grandfathered in so that up to mortgage interest of up to $1M can be deductible for the entire time I own the home.

This year 2018 on my primary mortgage had an average balance of $950,000 and my HELOC (which was used entirely to on upgrades to my home) balance was $154,000. In 2018 I paid $38,515 in interest on these loan. I believe thru the 1098 worksheet my interest that was deductible was reduced to $35,515 (I'm guessing because the combination of the loans amounts ($950,000 + $154,000 = 1,104,000) was greater than the $1M max. 

My question is, if I refinance my mortgage to bundle together my primary mortgage and my HELOC will I still maintain the grandfathered $1M max (because the acquisition of the debt occurred prior to Dec. 16 2017) OR will I be switched to the $750K max because I'm refinancing?

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2 Replies
Expert Alumni

Mortgage interest refinance

No, if you refinance a mortgage, the refinanced mortgage will be considered "home acquisition debt" up to the amount of mortgage principal just before you refinanced. Any additional debt not used to buy, build or substantially improve a qualified home isn't home acquisition debt.
Per IRS Publication 936, home acquisition debt originated after 12/15/2017 is debt that is secured by your main home or second home and is limited to $750,000.

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New Member

Mortgage interest refinance

I have a similar situation.


Original mortgage

$1,070,000 was done  August 2017 (prior to the Dec 16,2017 cutoff). As of now we deduct mortgage Interest up to $1 million.

We currently owe $1,007,000.

If we were to refinance would we still be able to Deduct mortgage interest up to 1 million?

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