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home equity line of credit tax deduction

Previously, interest was deductible only on up to $100,000 of home equity debt. However, you got that deduction no matter how you used the loan – to pay off debts or to cover college costs, for example. On the other hand, interest on home equity money you borrow for non-renovation purposes is no longer tax deductible.

The mortgage interest tax deduction allows homeowners to deduct from. What's the difference between a home equity loan and a HELOC?

Up until the end of 2017, borrowers could deduct interest on home equity loans or homes equity lines of credit up to $100,000. Unfortunately, many homeowners will lose this deduction under the new tax law that takes effect January 1, 2018.

The tax law splits “qualified residence interest” into two categories:. Whether or not your home equity loan or HELOC is considered acquisition.

Under the new law, home equity loans and lines of credit are no longer tax-deductible. However, the interest on HELOC money used for capital improvements to a home is still tax-deductible, as long as it falls within the home loan debt limit.

According to the IRS, the Tax Cuts and Jobs Act states that interest paid on home equity loans and lines of credit is still deductible, as long as they money is used to "buy, build or.

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Is a HELOC Still Tax Deductible? With rising home equities, HELOCs are the rise.. a straight-up home equity loan with a fixed rate, as opposed to a line of credit.. Once, all HELOC interest was deductible; the tax act that went into effect in 2018 limits.

The Tax Cuts and Jobs Act of 2017 eliminates the deduction for interest paid on home equity loans and lines of credit for tax years 2018-2026 unless you those funds are used to purchase, renovate or substantially improve your primary or second home.

For additional information, see the presidential home equity Line of Credit Disclosure Statement. Tax Deductions. Unlike credit card interest and other non-mortgage interest you may pay, you can deduct the interest you pay on a home equity line of credit for federal income tax purposes, subject to the requirements of the Internal Revenue Code.

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