HelocBasics » tax deduction

Home Equity Line of Credit Tax Deductions

Jamie — Fri, 10 Oct 2008 03:27:31 +0000

One of the advantages of borrowing money through a home equity line of credit is the possibility of deducting interest from your taxes.

To put it simply: If your HELOC was used to improve your home, you may deduct interest on lines up to $1 million ($500,000 married filing separately). If your HELOC used for other purposes, you may deduct interest on lines up to $100,000 ($50,000 married filing separately). Read more…

Taking a HELOC Tax Deduction

How the Home Equity Line of Credit Came to Be

Jamie — Wed, 27 Aug 2008 04:57:48 +0000

The home equity line of credit (HELOC) is a relatively new lending product. It seems that almost everyone has considered taking out a home equity line during the past few years. But, before the early 90′s, home equity borrowing was practically unheard of.

The U.S. EcoMonitor recently published a very worthwhile article detailing the history of the home equity line of credit and explaining how the nation entered the current mortgage crisis.

Here are the basics:

“The federal and many state governments promoted what is generally regarded as the social good of home ownership by providing a tax deduction for interest paid on mortgage loans. Prior to the Tax Reform Act of 1986, however, governments also permitted taxpayers to deduct almost any other kind of interest they incurred as well and the credit card companies and other consumer lenders naturally benefited, as their “product” (unsecured credit, auto loans, student loans, etc.) was this made cheaper to the consumer. After the non-mortgage interest deduction was phased out in the early 1990’s, a new financial product came over the horizon – the Home Equity Line of Credit, or HELOC. At first, the HELOC was designed to solve the problem created by the elimination of interest deductions on consumer loans. Simply grant a lender a second mortgage on your home and suddenly, as long as you had less than $1 million in total home loans, you could deduct all of the interest on what really was a personal line of credit.”

It’s amazing how a small piece of legislation could have such a lasting effect on the economy and the public’s view of homeownership.

See Also:

HELOC Tax Deductions

How a HELOC Works

HELOC Tax Deductions

Jamie — Tue, 01 Apr 2008 20:16:19 +0000

One of the advantages of borrowing money through a HELOC is the possibility of deducting interest from your taxes. This article explains the basics of taking a HELOC tax deduction.

How much HELOC interest can I deduct?

Taking a HELOC Tax Deduction

Jamie — Sat, 23 Feb 2008 02:02:00 +0000

One of the best aspects of a home equity line of credit (HELOC), is that the interest is often tax deductible. Because a HELOC is technically considered a home loan, most state and federal governments allow borrowers to deduct a significant portion of the interest they pay.

Townhall.com classifies HELOCs as a type of “good debt,” because of the HELOC tax deduction and the tendency towards lower rates:

“Good debt means inexpensive debt, and inexpensive debt is typically backed by collateral: A home or a second home, for example, along with a home equity line of credit (HELOC). The fact that most interest payments for home-related loans are tax-deductible only adds to their attractiveness. You can deduct the interest on a home or second home loan as large as $1 million (combined). For a second mortgage or HELOC, you can deduct interest up to $100,000.”

Before taking out a HELOC, be sure to talk to your accountant about your personal financial situation and your eligibility for HELOC tax deductions.