can i deduct interest on home equity loan

If you have other cash – just in case – then I think it makes sense for you to use your home equity loan to pay off your existing mortgage loan. As for deducting the interest you pay on the HELOC, in.

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There are quite a few cases where the interest on a HELOC can be deductible but there are also many times the interest will not be deductible. To add to the confusion, there will also likely be cases when only a certain portion of the home equity loan is deductible.

Interest on home equity loans has traditionally been fully 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.

In the past, homeowners who took out home equity loans were able to deduct the loan’s interest up to $100,000 from their taxes. Under the new tax bill, this deduction is a thing of past.

remember the recent tax law changed the rules about deducting interest paid on a home equity loan or line of credit. “You can only deduct the interest on a home equity loan or line of credit if you.

Three questions will determine whether the interest paid on additional mortgages (home equity second mortgages or mortgages on a second home) is deductible.

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A: This is one situation where the answer is a clear no, because you did not spend the loan proceeds to buy or improve your first or second home. So your HELOC is classified for tax purposes as home equity debt. For 2018-2025, you cannot treat interest on home equity debt as deductible qualified residence interest.

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