For alternative minimum tax purposes, however, you could only deduct the interest if the home equity loan proceeds were used to buy or improve your first or second residence. TCJA change for home.
So if you have a $250,000 home, you’d need at least 30% equity – a loan balance of no more than $175,000 – in order to qualify for a $25,000 home equity loan or line of credit. Advertisement 2.
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When you borrow on your home’s equity, your interest is tax-deductible up to a government-imposed limit. claiming the deduction on your taxes is easy.
For home equity loan interest to be deductible, the funds must be used to "buy, build or substantially improve" the home which secured the loan. If a taxpayer uses a home equity line of credit for personal expenses (e.g., repaying student loans, other debts, etc.) other than qualified home expenses, the interest from the loan is not deductible."
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Rules on deducting home equity loan, HELOC or second mortgage interest. How much you can deduct: So long as you meet the criteria mentioned above, you can deduct interest paid on debt up to $750,000 (for married couples) or $375,000 (individuals).
The 2017 Tax Cuts and Jobs Act introduced a slew of new tax breaks while doing away with others, one of which was supposed to be home equity loan interest. Much of that deduction has effectively.
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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.
The answer to the question of whether interest on a home equity line of credit is tax deductible is maybe. If you need cash and have equity in your home, a home equity loan or line of credit can.
Home equity loan interest. If you take out a home equity loan, your interest payments may qualify for a deduction in addition to your mortgage interest. Beginning in 2018, only the amount that is used to buy, build, or improve your home qualifies for the interest deduction.