[Kuhnjm]

Hi, my Ninja notes for REG state that mortgage interest isn’t deductible if the funds were used to pay off credit cards. My CPAexcel course says that the interest is deductible if I bought a truck (they don’t give the credit card example). However, it isn’t deductible for AMT. i’m not sure which opinion i should rely on. Can you please clarify?

Reg 73, redo April 2015
FAR Feb 2015
AUD June 2015
BEC Oct 2015
CPA, the marathon of all marathons...I can do this.

[leglock]

Mortgage interest not secured by your home is personal interest and not deductible. If u use ur heloc that is secured by your home to payoff credit card, it is deductible. Same thing if u use a heloc to buy an auto. Interest on ur credit xard balance is not deductible

For amt, only interest used to buy, build or improve a home is not an addback. So if u use ur heloc to pay off credit card, it is deductible but will also b an addback for amt

[sunlessC]

different limits for different debt.

acquisition debt, must be used to acquire/build/improve a home. interest on debt up to $1,000,000 is deductible for both regular and AMT.

home equity debt, which is just debt secured by your house, proceeds can be used for whatever you want. interest on debt up to $100,000 (or home equity if lower) is deductible. but NOT for AMT purposes, so it is an addback for AMT.

I've never heard of a rule disallowing deductions for regular tax if home equity loan debt is used to pay off credit cards. in fact, consolidating personal interest to a lower rate and getting a tax deduction while doing it is one of the selling points of home equity loans (the downside is, of course, it's secured by your house).

[Mary 2496]

^^ That's true. The reason as to why the heloc was taken isn't important, the interest can still be used.

[Author]

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