Originally Posted by bld999
How is that division achieved, if you don't mind?
The IRS has rules for this, of course. Roughly, having been months ago since doing taxes, you have to pool all your home mortgage/equity loans. You calculate the monthly principal due to your home purchase loan. This is generally your original home purchase mortgage amount. You calculate the monthly principal due to up to $100k of home equity loan. The proportion of interest expenses of the pooled loans due to those principal amounts are deductible on your normal federal taxes. The $100k home equity loan interest is not deductible for AMT. You calculate the principal used for investing, and its interest. This, with some restrictions (must have enough income, not invested in tax-free securities, documentation) is separately deductible as an investment expense. The AMT calculation is independent of the standard tax calc, so the $100k home equity portion can be investment interest for the AMT. The interest on any loan principal not included in those three categories is "personal" and not deductible.
As with other pooled allocations like this, the IRS specifies which categories are assumed to be paid off first: personal is first, then investment, then $100k equity, then home purchase.
I have a mortgage spreadsheet that I drag out once a year to do all the calculations. Turbo Tax helps some, but could be better with the AMT.
Look up the IRS instructions on this for the details, I didn't verify my memory of any of this, and I'm not a tax pro.