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As I recall the rules, home equity loans not for purchase money or "remodeling" are only deductible up to 100K, and interest related to amounts borrower in excess of 100k are not deductible.

Do I understand the rule correctly?

Yes, with a twist. That's true for regular tax purposes, but if the $100K of home equity debt was borrowed for "other stuff", and not expended to buy, build, or improve the property, then that part of the interest is an add-back for AMT purposes.

Furthermore, I assume that tracing rules apply, so that if one borrowed more than 100k but the excess above 100k went into "remodeling", all of the interest would be deductible.
Is that further understanding correct?

Yes, subject to the same AMT twist, above.

Do soft costs for remodeling, design fees, permits, etc. (i.e., not costs for laor or materials for remodeling) satisfy the IRS for purposes of making the interest on the money borrowed therefor deductible?

Yes. It's part of the total cost of the project.

What IRS publication deals with which expenses are permissible and those that are not?

Try Pub. 936, Mortgage Interest

I think you've got it right, but I'd point out that mortgage debt (including home equity loans borrowed for improvements) count as additional "acquisition debt", defined as amounts borrowed to buy, build, or improve the property.

And as to the additional $100K amount of home equity debt: that interest is deductible for regular tax purposes, but not AMT.

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