Home Equity Line of Credit Loan Interest

[JohnZ1111]

TurboTax support,

I have a HELOC loan in 2021 and took some cash out. I only made interest payment in 2021 and reported in Turbotax. But when going through the Fed tax review, it shows me I have one error in the Schedule A - Home mortgage interest worksheet, "Item G-4: Borrowed in 2021", I have to put in the amount here. But the software would allow me to input any number here on this sheet, even it is highlighted field but just can't type in anything. Meanwhile the software say this is the only error for required field. Don't know how to proceed from here now.

Please help.

Thank you very much,

JohnZ

[DianeW777 · Accepted solution]

If you are using TurboTax CD/Download version you must right click on the filed then select 'Override' to change the amount. More information is provided due to the cash out of the HELOC.

The state of your HELOC funds is important to calculate the appropriate amount of mortgage interest deduction that is allowed. In other words since some of the money was used for something other than to buy, build or improve your home you need to figure out the allowable deductible interest? Only loan proceeds that are used directly on your home for capital improvements can be used to calculate your mortgage interest deduction.

Any additional debt not used to buy, build, or substantially improve a qualified home isn't home acquisition debt. TurboTax will calculate the amount of allowed mortgage interest deduction based on your entry or you can choose to make the entries yourself.

• To review the information and worksheets you can use this link: IRS Publication 936, page 12 (you can make the appropriate entries by selecting 'I'll enter it myself') 

The worksheet you are referring to can be edited by using the right click, then selecting 'Override'.  Returns that contain overrides cannot be e-filed and may not be covered under our 100% Accurate Calculation Guarantee.

• How do I override an amount calculated by TurboTax?

Please update here if you need further assistance and one of our tax experts will help you.

[JohnZ1111]

Got it, DianeW777,

Thank you very much for the good explanations.

Does that mean if I took the cash out for something else and anyway this interest I paid for this HELOC loan can't be tax deducted anyway, so make sense that I don't even put in this 1098 amount ?

Please advise.

Regards,

JohnZ

[DaveF1006]

Yes, if the entire amount of the HELOC loan was used for anything else other than to buy, build or improve your home, then you will not report the 1098 since the interest is not deductible.

@JohnZ1111