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Hi foo1bar (and all,)

I haven't gone to the tax board to check on 2gifts' inquiries (I have little doubt she's done that diligence... I haven't had much time in the neighborhood recently.)

HOWEVER, didn't want to leave the last post as the last post, as its inaccurate;

A HELOC for more than the current mortgage is just like a regular cash-out refinance.
The part that's being refinanced (that was purchase money) is deductible.

If you started with $400,000 in purchase loan(s) on your primary residence, all the interest on it would be deductible.
If you paid down the principal to $50,000, and then got a HELOC for $100,000, the interest on all of it would be deductible.
Interest on any leverage above the *remaining* balance (not original balance) of the original purchase leverage, plus $100,000, is *not* deductible against taxable income.

In short; Any deductions you may have once had on your original purchase leverage is permanently surrendered as you give back that leverage by paying in principal.

Dave Donhoff
Leverage Planner
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