Refinanced home loan in 2021 and took cash out -- some used for home improvements, some used to pay down other debt. How does this affect 2023 interest paid?

[DawnC]

You can't claim the interest that was not used to buy, build, or substantially improve the home.   For tax years 2018 through 2025, you can only deduct the interest from the amount of your loan that was used to buy, build, or improve the home that it’s secured by.

If you’ve ever used part of this loan to pay for things other than this home, you cannot deduct the interest from that amount of the loan, even if the transaction didn’t take place this year.   Don’t worry, we’ll help figure out what amount of interest you can deduct.

Examples of common ways you might have used this money not on your home include:

• Making a down payment on a different home
• Funding improvements on a different home
• Making a payment on a different loan or debt
• Having miscellaneous large purchases