Is home equity loan deductible for 2018 if it is a first lien, your only loan?

[Carl]

If you receive a 1098-Mortgage Interest Statement from the lender, it's deductible. Most HELOCs are deductible.

[billbeach1744]

I thought new tax law for 2018 did away with deductibility of heloc interest but still allows it for first mortgage. My heloc is my ONLY loan and is thus called a first lien. Not sure if I can deduct it and call it my first mortgage. Cannot wait 12 months to find out. I will refinance now if necessary.

[Carl]

We're talking about 2017 taxes here. I'm not that deep into the new tax laws for 2018 yet. Been reading through it, but haven't got to the portion about HELOCS and 2nd mortgages yet. Still trying to interpret all the first mortgage stuff not only for one's residence, but for 2nd homes, rental property and business property. Lots to interpret and figure out on that front.

[TaxGuyBill]

It is deductible if the money was used to buy, build, or substantially improve your home.

For any money that was not used for that, that portion would not be deductible in 2018.

[victropolis]

What about people that use the HELOC paycheck parking strategy to accelerate the payoff of their mortgage balance?  This involves parking any money that comes in in the HELOC, thus helping to lower the average daily balance of the HELOC to minimize interest charges, and paying all your bills out of the HELOC and if you have a surplus every month, you can quickly payoff your mortgage and save tons of interest.  It's basically using your HELOC like a checking account.

[victropolis]

<a rel="nofollow" target="_blank" href="https://www.google.com/search?q=heloc+paycheck+parking&ie=utf-8&oe=utf-8&client=firefox-b-1-ab">http...>

[TaxGuyBill]

What about it?  The HELOC is not being used to refinance the mortgage (or even pay for the mortgage), is it?

[victropolis]

it depends.  there are two ways to do this.  one way is to replace your 1st lien position mortgage with a 1st lien position HELOC.  the other way is to have a 2nd lien position HELOC and periodically jump down the amortization schedule on your 1st by making a large lump sum payment to the 1st from the HELOC then taking a few months to pay down the HELOC and rinse and repeat, until the 1st is paid off.

[victropolis]

Or some people put a 1st lien position HELOC on their homes from the start and never have a 1st lien position mortgage.