Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
Hello,

I am trying to find out how much interest of the proceeds I would receive from refinancing my home (for more than the current payoff balance) would be tax-deductible. It was suggested I try this board.

Here is my situation:

*Purchased home in 1981. Original purchase price 83k. Financed 78k.
*Refinanced in 1992 to a 15-year mortgage (the one I have now).
*I have a current pay-off balance of about 38k.
*My house appraised for about 275k.
*Married – File Jointly
*I don't plan to do any home improvements with the proceeds. I am going to invest it.

If I refinance (paying off the current mortgage) how much money am I permitted to 'pocket' and still be allowed to write-off the interest on the loan for tax purposes.

I've read the IRS stuff and I just get confused. It all starts sounding like gibberish to me -- with talk of loans before 1987 and after 1987, etc. I truly get more confused the more I read.

The mortgage company has told me that if I take a loan for 220k (paying off my current mortgage; the closing cost; and pocketing about 180k) -- interest on the whole 220k will be tax-deductible?

I thought I could only borrow 100k over what I already owed (i.e., a loan 138k and pocket 100k); and if I borrowed more, then I'd have to use it for a MAJOR home improvement(s) for it to qualify for tax deductions.

I appreciate any help.
Print the post  

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.