My understanding is that Mortgage Interest must have its uses separated in order to do this calculation properly, because if the interest is for anything else other than home related (building, remodeling, etc) it isn't deductible with AMT. Please correct me if my assumption is mistaken or needs better clarification.
If my assumption above is correct, the issue of my post is regarding the HELOC interest. How do you determine what part of the interest on a HELOC has non-deductible usages such as furniture for the home, student loans, etc vs deductible home interest?
What is the typical accounting practice method to do this sort of account reporting? How is this treated over the life of the HELOC when it has a mix of home remodeling uses and non-deductible purchases? When money is paid against the HELOC balance, how do you record if that money is being used to pay off the non-deductible part or can you?
What accounting methods are correct or permissible to use which are acceptable to the IRS? Access to a spreadsheet which allowed recording of the HELOC checks written with usage to determine their part of the interest would be ideal.
If my approach and concern to this whole issue of Form 6251- Line 4 of Home Mortgage Interest Adjustment Worksheet is wrong, please kindly correct me and point me to the proper resources so I can become better enlightened. Thanks!
Edward