Posted on: 13th Jan, 2010 08:54 am
I am considering the use of a HELOC to pay off an existing 15 yr fixed mortgage loan of $160,000. Is all the interst I pay each year deductible? FMV of home is $500,000.
Only do that if the interest on the new loan is less than your 15 yr mortgage
hi danny,
the interest paid on a heloc loan is tax deductible. if you are married and file jointly, you can deduct $100,000 and if you are single, you can deduct $50,000. to calculate the amount of interest qualifies for tax deduction, you need to deduct the outstanding loan balance from the fair market value of the property. you can only deduct this balance amount, no matter what the actual home equity loan amount is.
the interest paid on a heloc loan is tax deductible. if you are married and file jointly, you can deduct $100,000 and if you are single, you can deduct $50,000. to calculate the amount of interest qualifies for tax deduction, you need to deduct the outstanding loan balance from the fair market value of the property. you can only deduct this balance amount, no matter what the actual home equity loan amount is.
as eric noted, the two interest rates need to be looked at carefully. also, keep in mind that the rate on helocs is going to be variable. you made no mention of the rate on the traditional mortgage, but i have to presume, i guess, that it's higher than the rate on the heloc.
you simply need to proceed with care.
you simply need to proceed with care.
