At first glance, there appears to be a long list of limitations when it comes to mortgage interest deduction under the new tax law, but the IRS says that “in many cases”, taxpayers can continue to deduct the interest they pay on home equity loans.
Assuming our clients had as many questions as we did, CWA Director of Tax, Kristina Yarbrough, decided to offer some clarity.
She says that home equity loans can still be deducted as long as the following applies:
– The total of all loans on a main home or second home do not exceed $750,000
– A loan is taken out ONLY to buy, build or substantially improve the home that it is secured by.
– No deduction if used to pay off credit card debt, student loans, or any other loan not secured by the asset.
– A loan is NOT taken out to buy a different home – that is not deductible.
– The loan must be secured by the asset the money is going to be put into.
For questions on your unique circumstance, reach out to your CWA Planning Team.