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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.
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