Posted on: 18th Mar, 2007 01:17 pm
Are HELOCS Tax deductible? If so, is there a max? When is a HELOC not tax-deductible?
Hi Guest,
Welcome to the forums.
Using a heloc, one can deduct that part of the interest on the loan, which does not exceed the value of the home and should be restricted to an amount of $100,000. Moreover, the home should be the primary residence of the borrower.
The interest can be deducted provided the loan is taken out for improvement of the home and for any purpose except for the purchase of tax-exempt securities such as municipal bonds.
Thanks,
Jerry.
Welcome to the forums.
Using a heloc, one can deduct that part of the interest on the loan, which does not exceed the value of the home and should be restricted to an amount of $100,000. Moreover, the home should be the primary residence of the borrower.
The interest can be deducted provided the loan is taken out for improvement of the home and for any purpose except for the purchase of tax-exempt securities such as municipal bonds.
Thanks,
Jerry.
As long as the interest on your first and second mortgages (the heloc) is $100,000 or less, you can deduct the heloc interest from your tax return.
hi guest,
you can qualify to get tax deduction benefits on your home equity line of credit if it is a qualified home equity debt.
by the term qualified home equity debt, i mean, it should be used for reasons other than to buy or build or substantially repair your home. also, the debt amount (the first loan and the heloc) must be less than the total cost of your home and any improvement done on it with the heloc.
the total amount of the debt including two mortgages should be limited to the smaller of either of the following:
1. $100,000 ($50,000 for married couples filing separately) or
2. the total fair market value of the property or properties (if there are two homes securing the mortgages) reduced by home acquisition debt and grandfathered debt.
home acquisition debt is the total mortgage amount taken against your home for the purpose of buying, building or improving your home substantially (which can increase your home value). it should be limited to the cost of your home and any improvement done on it.
grandfathered debt is home loan taken before october 14, 1987 or refinance loan taken out to pay off such an existing loan.
i hope this is going to help you.
god bless you.
samantha
you can qualify to get tax deduction benefits on your home equity line of credit if it is a qualified home equity debt.
by the term qualified home equity debt, i mean, it should be used for reasons other than to buy or build or substantially repair your home. also, the debt amount (the first loan and the heloc) must be less than the total cost of your home and any improvement done on it with the heloc.
the total amount of the debt including two mortgages should be limited to the smaller of either of the following:
1. $100,000 ($50,000 for married couples filing separately) or
2. the total fair market value of the property or properties (if there are two homes securing the mortgages) reduced by home acquisition debt and grandfathered debt.
home acquisition debt is the total mortgage amount taken against your home for the purpose of buying, building or improving your home substantially (which can increase your home value). it should be limited to the cost of your home and any improvement done on it.
grandfathered debt is home loan taken before october 14, 1987 or refinance loan taken out to pay off such an existing loan.
i hope this is going to help you.
god bless you.
samantha
Home equity lines of credit, or HELOCs work like credit cards. Instead of getting a lump sum, you start out with a credit line and can draw up to the credit line's limit. During the first years of the account, the minimum monthly payment covers only the interest on the balance. The rate is variable and usually is tied to the prime rate.
On this kind of equity debt, the interest you pay is deductible from your federal income taxes in most cases! :)
On this kind of equity debt, the interest you pay is deductible from your federal income taxes in most cases! :)
Thank you for all your responses. I do have another question. Would the HELOC be tax deductable if I pull equity (about $47K) from my primary home and use that money to pay down my rental property so that I can have my LTV% for the rental property at 75%? I am trying to refi my rental property however, the LTV% is currently at 85% and no lender is able to refi my rental property at such a high LTV%. Either, I get my rental property appraised higher or pull equity out of my primary home. My other choice is to get a Hybrid ARM and lock in at 10 yr interest only payment. I would rather lock in at a 30 yr loan and that can only be done by pulling equity out of my primary home and use it to bring the LTV% to 75%. What do you guys think?
Hi Guest,
I don't think the heloc will be tax deductible if you use it to pay down the debt on your rental property.
If you pull out equity from your primary home by taking out heloc, the loan will be tax deductible provided you use it for purchase or home improvement purpose or to pay off other debts.
Thanks,
James.
I don't think the heloc will be tax deductible if you use it to pay down the debt on your rental property.
If you pull out equity from your primary home by taking out heloc, the loan will be tax deductible provided you use it for purchase or home improvement purpose or to pay off other debts.
Thanks,
James.
HELOC,
You can deduct the interest that you pay on your mortgage against rental property. But you cannot deduct the interest on the heloc if you use it to pay off the loan against rental property
Regarding the heloc, you will be able to deduct interest charged on it to repay the loan taken against your primary/personal residence. This is because the heloc is secured by your primary residence and not the rental property.
You can deduct the interest that you pay on your mortgage against rental property. But you cannot deduct the interest on the heloc if you use it to pay off the loan against rental property
Regarding the heloc, you will be able to deduct interest charged on it to repay the loan taken against your primary/personal residence. This is because the heloc is secured by your primary residence and not the rental property.
Heloc, how will be able to get your rental property appraised higher, I don't get it. can you pls explain?
Whether you go for a ARM or a 30 year fixed, the interest payable on none of the loans can be deducted because you will be using it to pay down rental property debt. So, its up to you whether you will prefer using almost fixed monthly payments or variable payments.
Whether you go for a ARM or a 30 year fixed, the interest payable on none of the loans can be deducted because you will be using it to pay down rental property debt. So, its up to you whether you will prefer using almost fixed monthly payments or variable payments.
If I get a HELOC, do the lenders track where the money goes? If not, and I use the money to pay the rental property, then the interest on the HELOC pulled from my primary residence would be tax deductible?
Welcome back Heloc,
If you pay off the rental property debt with the Heloc without informing the lender who has offered the loan against rental property, he will not come to know of it.
In that case, there is a possibility of your interest on Heloc being tax deductible. But I am not so sure of this.
If you pay off the rental property debt with the Heloc without informing the lender who has offered the loan against rental property, he will not come to know of it.
In that case, there is a possibility of your interest on Heloc being tax deductible. But I am not so sure of this.
If I take a Heloc on my primary home to buy a second home=not an investment property would that be tax deductible?
Thanks
Thanks
Please read the post above made by Samantha for a concrete answer to your query.
The value of my rental property is much lower than the value of the first and HELOC (second) mortgages on it. What happens if I stop paying the HELOC? Would the second bank foreclose on the property knowing they are in second position and not get anything out of the foreclosure? Can the second place a lien on another property, on my bank accounts, or garnish my wages?
IF I TOOK A 200,000.00 HELOC OUT OF THE EQUITY OF MY HOME.. AND USED PART OF IT TO STAY AFLOAT ..DO UPGRADES ETC IS IT TAXABLE...I JUST RECEIVED AN INQUEST TO WHY I DID NOT FILE IN 2007..WHY I WAS UNEMPLOYED.. AND SUFFERED BACK PROBLEMS..NOT WORKING TO BE ABLE TO SHOW INCOME SO I COULD WRITE OFF THE INTEREST IS WHAT I FELL THEY WANT TO KNOW... HOW I WAS ABLE TO PAY MY MORTGAGE WITH OUT A JOB.. IT IS CALLED A BANK ACCOUNT....DAHHHH...HELP PLEASE....
IF I TOOK A 200,000.00 HELOC OUT OF THE EQUITY OF MY HOME.. AND USED PART OF IT TO STAY AFLOAT ..DO UPGRADES ETC IS IT TAXABLE...I JUST RECEIVED AN INQUEST TO WHY I DID NOT FILE IN 2007..WHY I WAS UNEMPLOYED.. AND SUFFERED BACK PROBLEMS..NOT WORKING TO BE ABLE TO SHOW INCOME SO I COULD WRITE OFF THE INTEREST IS WHAT I FELL THEY WANT TO KNOW... HOW I WAS ABLE TO PAY MY MORTGAGE WITH OUT A JOB.. IT IS CALLED A BANK ACCOUNT....DAHHHH...HELP PLEASE....