Mortgage interest deduction

No. See IRS Publication 936.

-- Phil Marti Clarksburg, MD

You have a deductible HEL interest amount of HEL_INT x 100/110

__ Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH

Each year the interest on 100K is deductible, until the balance is below 100K. But, if any of the loan is used for investment purposes (but not tax-free bonds) you may use that interest as investment interest and deduct it there. Just keep a good paper trail. JOE

No, you don't need two separate loans. Just figure the interest paid on $100,000 and use that until the loan balance drops below $100,00. Dennis

No, you do not need to take out two loans. Principle payments reduce the amount generating non-deductible interest first, dollar for dollar, which makes the book keeping easier.

You can, and should, take one loan for the total amount. Each year, you will use Table 1 in Part II of IRS Publication 936 to calculate how much of the interest is deductible. Note that the $100,000 limit applies to the current balance of the loan, not the original amount. As you reduce the outstanding balance by making payments, a larger proportion of the interest becomes deductible. When the remaining balance drops below $100,000, all of the interest will be deductible. Table 1 and the accompanying instructions in Pub. 936 take this into account. Bob Sandler

Also note, that if you have home acquisition debt and/or grandfathered debt, your qualified home equity debt is the lesser of $100K or the FMV of the home less the acquisition and grandfathered debt. This is remote, but there are situations where home equity loans are granted and total home debt exceeds FMV.