When refinancing the debt for acquisition of a personal residence there are limitations for deductible interest. The refinanced debt that is equal to the principal amount on the original acquisition debt is qualified acquisistion debt, and any amount above that figure is not classified as qualified residence debt. This excess debt interest is generaly not deductible (exception: business debt, investment debt, home improvement).
Why is this information significant? Be prepared for the IRS to begin paying attention to these calculations which have been ignored by many taxpayers. This will be a source for increased revenue for the government, and don't forget if an infraction is discovered they can search backwards.
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