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My question is, if we "deposit" an equal amount of money from our HELOC back to the money market account, will it still be deductible? Or did we miss the opportunity?

You should be OK. For improvements, you can use expenditures up to 24 for months as being "acquisition indebtedness".

And with a HELOC, you aren't actually required to trace the use of the loan proceeds, up $100K, where you actually had that much equity in the home when you took out the loan. You can use the money for anything. (But not for AMT purposes.) But you should be OK for AMT also, using the 24 month window.

I have another question. Why borrow on your HELOC at a rate of what, 5-6%, to replenish a money fund that pays you, 1%? If you have an emergency come up, and you need the funds, THEN use the HELOC. Until then, use the money you would make for loan payments to replenish your money market acct.


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