can i deduct home equity loan interest

home equity loan interest Mortgage interest on purchase loans is still deductible under tax reform up to $750,000, but the deduction for interest on home equity loans becomes nondeductible once.

Home equity loans can be tax deductible in 2018 if used to.. from taking a mortgage interest deduction if your standard deduction saves you.

The new legislation wiped out the deduction for home equity debt, including on existing loans. If you refinance your mortgage to include the payoff of the HELOC you can deduct mortgage interest up to a maximum of $750,000 of mortgage debt that was used to purchase or improve the home as an itemized deduction.

Under the new law, taxpayers can still deduct interest paid on home equity loans and lines of credit as long as they are used to buy, build or significantly improve the home that secures the loan. Hence, interest on a home equity loan that is used to build an addition to an existing home is generally deductible.

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For tax years before 2018, you can also generally deduct interest on home equity debt of up to $100,000 ($50,000 if you’re married and file separately) regardless of how you use the loan proceeds. For details, see irs publication 936: Home Mortgage Interest Deduction.

Responding to many questions received from taxpayers and tax professionals, the IRS said that despite newly-enacted restrictions on home mortgages, taxpayers can often still deduct interest on a home equity loan, home equity line of credit (HELOC) or second mortgage, regardless of how the loan is labelled.

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 · The down side to using a HELOC, in addition to not being tax deductible, is variable interest rate. Home Equity Loan Loophole. Home owners can still get access to the equity in your home, AND it can be tax deductible.

"Under the new law, for example, interest on a home equity loan used to build an addition to an existing home is typically deductible, while interest on the same loan used to pay personal living.