Level 3

Is interest paid for a heloc loan on a house includable with the interest paid on the original loan for the mortgage interest credit on form 8396?

Forum|Forum|2 years ago
February 9, 2024
1 reply
7 views

The taxpayer has a mortgage credit certificate and gets a mortgage interest credit on form 8396. The taxpayer took out a heloc loan for improvements on the house. Is the interest paid on that loan includable with the interest on the original loan for the credit?

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Terry53029

Intuit Community Champion

A mortgage taken out after October 13, 1987, to buy, build, or improve your home (called home acquisition debt) but only if throughout the year these mortgages plus any grandfathered debt totaled $1 million or less. The limit is $500,000 if you're married filing separately. For homes acquired after December 15, 2017, the debt limitation is $750,000, or $375,000 if you're married filing separately.

Your client should receive a 1098 for any loan secured by his home, and if it meets the rules its deductible.

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retAuthor

Level 3

I am only talking about the mortgage interest credit on 8396. He has a certificate that states what percent of interest paid he can get a credit on. Can a 2nd loan interest be included with the interest on the original loan for the credit?

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Terry53029

Intuit Community Champion

I don't think you can add interest to the original loan the credit was based on unless you refinanced the original loan. see link for 8396 with instructions.

https://www.irs.gov/pub/irs-pdf/f8396.pdf

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