On Wed, 28 Jun 2000, Bryan Caplan wrote:

> William B Vogt wrote:
> 
> >   3.  Limitations on tax advantage.  There is a pretty strict limit on how
> >       much home equity interest can be deducted for non-home-improvement
> >       reasons.  My recollection is that, if you have more than $100K in
> >       mortgage debt, then you can deduct $0 in non-home-improvement
> >       related interest.  Furthermore, people with small mortgages may not
> >       even itemize on their returns, rendering the advantage void.  So,
> >       the relevant people are those with a mortgage big enough to make it
> >       worth itemizing but small enough that the tax advantage exists.
> 
> I've never heard of this.  Does anyone know more?

Hmmmm.  I seem to have misread the relevant publication.  Here are links:

http://taxguide.completetax.com/text/Q05_2000.asp
http://www.irs.ustreas.gov/prod/forms_pubs/pubs/p936toc.htm

What I said before appears to be wrong.  The limit on home equity debt is
$100,000 of home equity debt (there does not appear to be a strict limit
related  to the total debt on the home). There is an
additional limit that all deductible debt must total <= fair market value
of the home.  So, (the corrected version of) my point 3 is not going to
be relevant for much of anyone.



 William B. Vogt                      Assistant Professor     
                                                               
 H. John Heinz III School             ph: (412) 268-1843      
 of Public Policy and Management      fx: (412) 268-7902      
 Carnegie Mellon University           [EMAIL PROTECTED] 
 Pittsburgh, PA 15213                 [EMAIL PROTECTED]      


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