The deduction amount includes the interest you pay on your mortgage, home equity loan, home equity line of credit (HELOC) or mortgage refinance. If you took on the debt before Dec. 15, 2017, you can deduct interest on $1 million worth of qualified loans for married couples and $500,000 for those filing separately for the 2018 tax year.
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When the Tax Cuts and Jobs Act was passed in December 2017, it was widely reported that the deduction for home equity loan interest was going away in 2018. And to be fair, as the bill was written,
Home Equity Loan Tax Deductions Eliminated. In the past, most homeowners with home equity loans were able to deduct the interest paid on those loans, up to $100,000 in most cases (or $50,000 for married couples filing separately). With the passage of the Tax Cuts and Jobs Act, however, that deduction is going away.
However, if the taxpayer took out a $250,000 home equity loan on the main home to purchase the vacation home, then the interest on the home equity loan would not be deductible. Example 3. In January 2018, a taxpayer takes out a $500,000 mortgage to purchase a main home. The loan is secured by the main home.
Dollar amount: as shown above, the interest deduction from your home equity loan is not unlimited. The limit is higher for money used to buy, build, or improve your home. The limit is higher for money used to buy, build, or improve your home.
"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.
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The good news is that the IRS has announced “Interest on Home Equity Loans Often Still Deductible Under New Law.” The details are in IR 2018-32, a news release from the IRS. The book, not the cover. According to the IRS, even if a loan is labeled “home equity,” the interest may be deductible on your tax.
If you use a home equity loan or home equity line of credit to buy, build or improve your main residence or second home, the new tax law allows you to deduct up to $100,000 in interest on those loans, the Internal Revenue Service says.. The IRS this week clarified a provision of the Tax Cuts and Job Acts that eliminates the deduction for interest paid on home equity loans and lines of credit.