Client refinanced his mortgage on primary residence in 2020. The original mortgage was all acquisition debt. When the loan was refinanced, client rolled closing costs into the new loan and also had some cash out. Original loan was taken out in 2013 when $1 million loan threshold was in effect. New loan is for over $1 million.
1. Would you consider the mortgage interest on the original loan to be 100% deductible since the amount borrowed was for acquisition debt only?
2. I know the refinanced mortgage interest should be allocated between home equity and home acquisition debt, but since it was a refinance of the original mortgage, would the $1 million threshold still apply or only $750,000?
3. Would you enter both mortgages on the Deductible Home Interest Mortgage Worksheet in ProSeries or only the refinanced mortgage and use the 1098 Mortgage Interest Worksheet for the original loan?
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