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We are currently in the process of buiilding a new house. To finance this, we have a construction loan and will be selling our current house. However, we are taking out a home equity line of credit to act as the bridge money in case we don't have our current house sold before I need the money to complete the new house. So I have 2 questions: 1) Can I deduct the mortgage interest for the current house as well as the house under construction, or do I have to choose one or the other to deduct? 2) I believe the interest on the home equity loan will be deductible since it is being used to finance the new home. If I assume that the interest for the new house is deductible, are there any limits on the home equity loan that would affect me? The line of credit is for a $150k which is our equity in our existing home if that makes a difference.
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