Is home equity interest tax deductible

Tax rules for home equity loans - MortgageLoan. Can I deduct interest on a home equity loan or? Can home equity interest be deducted from income tax? Is mortgage interest still a tax deduction?

What is interest home equity?

If you took on the debt before Dec. Still, an explanation recently issued in an IRS publication might not satisfy divorcing spouses. The GOP Tax Plan may have made this move a lot more expensive. Find out here if your mortgage debt is still tax deductible. But with the tax reform brought on by President Trump’s Tax Cuts and Jobs Act (TCJA), a lot of homeowners are struggling to work out whether they can still take a home equity loan tax deduction.

HELOC Tax Deductions. The answer is you can still deduct home equity loan interest. Can I claim a home equity loan interest deduction?

You can take a home equity loan interest deduction, but the mortgage interest deduction rules also apply to these types of loans. In other words, you can only deduct the interest paid on home equity loans or lines of credit in cases where you borrowed money to buy, build or substantially. Under the new law, home equity loans and lines of credit are no longer tax -deductible. Dates are important here, too. Maximum Refund Guaranteed.

As under prior law, the loan must be secured by the taxpayer’s main home or second home (qualified residence), not exceed the cost of the home , and meet other. Interest on home equity loans and lines of credit are deductible only if the borrowed funds are used to buy, buil or substantially improve the taxpayer’s home that secures the loan. Taxpayers used to be able to take a home equity loan or tap into a home equity line of credit, spend the money on whatever they wanted (pool, college tuition, boat, debt consolidation) and the interest on the loan was tax deductible. For borrowers in higher tax brackets this was a huge advantage.

The IRS says that you can, but only if the. Deducting home equity loan interest can potentially make the loan for these purposes less expensive and turbo-charge strategies like debt consolidation. Suddenly, the interest you pay becomes tax - deductible and is no longer just an expense. Interest on such home equity debt was generally deductible regardless of how you use the loan proceeds, including to pay college tuition, credit card debt, or other personal purposes.

Home equity loan interest. See other reader QAs about the new tax law, or submit your own question. Q I understand that the new tax law eliminates the deduction of interest on home - equity loans.

But, will there be an. If the money went to pay off credit card debt or to buy a new car. If the borrowed money is not used for a qualified business transaction (such as purchasing rental property) then the interest is not a deductible business expense. California does allow deductions for your real estate tax and vehicle license fees.

However, if the home equity loan was used to substantially improve. Preview Your Rate and Monthly Payment Before You Apply.