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Home Mortgage Interest

KMACK
Level 4

I have a client who refinanced his home mortgage in 2021 and took some additional cash to do some renovations on his home.  The balance before the refinance was approximately $733,000 and the balance after was approximately $833,000.  In addition, he converted a portion of his property into a separate living space and rents it out.  This is approximately 20% of the total living space.

With the refinance, he now exceeds the $750,000 limit on deducible mortgage debt.  So my questions are:

1. Is a refinance that takes you above $750,000 in mortgage debt subject to the $750,000 limit?

2. Since 20% of the home is treated as a rental, can 20% of the $833,000 be allocated to the rental leaving the other 80% as personal residence debt (which would put him below the $750,000 limit?

Thank you. 

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1 Solution

Accepted Solutions
sjrcpa
Level 15

Yes to both.


Ex-AllStar

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3 Comments 3
sjrcpa
Level 15

Yes to both.


Ex-AllStar
KMACK
Level 4

Thank you.

sjrcpa
Level 15

YW.


Ex-AllStar