I purchased my home (main residence) in 1994 at a cost of $207,000. Initially, this home was mortgaged to the Commonwealth Bank for $150,000. In 2000, I converted the mortgage to a Line of Credit (secured by my home) with an initial limit of $250,000. In subsequent years this LoC has been increased to its current limit of $480,000. The home is currently valued at around $620,000. Over the years since the LoC was established, the account has been used as a current account (money in, money out) for my wife and me. We have probably had a turnover of over $2million through the account.
We are now planning on heading overseas for an indeterminate period of time and renting out our home.
My question is, what is the appropriate loan amount we can use for the determination of interest deductions?
Thanks Julia, that is a helpful, if disappointing, response. One quick further question if I may? Would the situation change if I were to take out a new mortgage on my property and use it to pay off the line of credit?