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Mortgage interest is only deductible if you take out the loan "to purchase" the house.

Since dozer183e is located in California, United States, United States laws apply for federal taxes, California state laws apply for state taxes.

According to federal tax laws, the interest of up to $100,000 of home equity debt (debt used for purposes other than home acquisition), or 100% of one's home equity (fair market value of one's home as of the time the home equity debt is acquired, minus the balances of all other debts secured by one's home), whichever is less, can be deducted on Schedule A. (Of course, one benefits from itemizing only to the extent that the total of one's itemized deductions exceed one's standard deduction.)

See (IRS Publication 936: Home Mortgage Interest Deduction) for details.
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