– Crystal Vagnier – Select Group – Writer/Editor
When the new federal tax law came to be there was rightfully a lot of misunderstanding and confusion regarding home equity loans and interest deductions. While the law now halts interest deductions on home equity indebtedness for the next eight years, this postponement doesn’t necessarily apply to every home equity loan (HELs) or lines of credit (HELOCs). Instead of being able to deduct interest up to $100,000 (even if it was towards non-home related items), the IRS has offered some clarification on how to deduct home equity loan interest that is used toward home improvements when borrowed against home equity.
When HELs and HELOCs are used for “acquiring, constructing or improving” a residence it will not be considered home equity indebtedness, instead it is classified as an acquisition debt. Under the new law deductions on acquisition debt interest are feasible. For any loans between December 16, 2017 and December 31, 2025, interest paid on acquisition debt may only be deducted up to $750,000 limit on total housing debt (for mortgage, HELs, and HELOCs combined).
For additional assistance or clarification on your home loan, call your local Stanford Mortgage Advisor. Contact Stanford Mortgage at (866) 912-3017 or at www.StanfordLoans.com