What can I buy with my mortgage loan?
You can only deduct home mortgage interest to the extent that the loan proceeds from your home mortgage are used to buy, build, or substantially improve the home.
For example: If you took a $10,000 home equity loan but used $4,000 for a vacation and the other $6,000 to improve your home, you would only be able to deduct interest on the $6,000 you used for your home.
Exception: If the loan were taken out on or before October 13, 1987, and the loan qualifies as grandfathered debt, all the interest would be fully deductible.
For example: If you took a $10,000 home equity loan but used $4,000 for a vacation and the other $6,000 to improve your home, you would only be able to deduct interest on the $6,000 you used for your home.
Exception: If the loan were taken out on or before October 13, 1987, and the loan qualifies as grandfathered debt, all the interest would be fully deductible.
