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Beginning in the late 1980s, Congress placed certain limits on the types and amounts of loans that qualify for the mortgage interest deduction.
Pre-October 13, 1987 loans. If you took out a mortgage on or before October 13, 1987, all of the interest is fully deductible, regardless of the amount of the loan. This is called "grandfathered debt."
If you had such a mortgage and you refinanced it after that date, the new mortgage is treated as grandfathered debt to the extent of the principal balance remaining on the pre-October 13, 1987 loan. Any mortgage amount over that limit may be eligible for treatment under category (A) or (B) discussed below.
If you had established a home equity line-of-credit as of October 13, 1987 and you borrowed amounts against it after that date, then those amounts are treated under category (A) or (B), below, depending on how the proceeds were used. Amounts borrowed before that date are fully deductible grandfathered debt.