Does the calculated acquisition cost on a HELOC on main home and the interest expense from mortgage on second home both flow thru to interest deductions? If not why?
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New Member

Does the calculated acquisition cost on a HELOC on main home and the interest expense from mortgage on second home both flow thru to interest deductions? If not why?

 
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Level 15

Does the calculated acquisition cost on a HELOC on main home and the interest expense from mortgage on second home both flow thru to interest deductions? If not why?

I'm not sure about your question. What problem do you think you are seeing?  You can only deduct the interest on acquisition cost, not equity, and there is an overall limit of $750,000 balance in both mortgages.  What do you think isn't working correctly?
*Answers are correct to the best of my ability but do not constitute legal or tax advice.*
**If a post answers your question, choose it by clicking on "Mark as Best Answer".**
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Level 4

Does the calculated acquisition cost on a HELOC on main home and the interest expense from mortgage on second home both flow thru to interest deductions? If not why?

The interest on the Home Equity Line Of Credit may flow if the total loans on the property do not exceed the value of that property AND the funds were used to “buy, build or substantially improve the taxpayer’s home that secures the loan”.

Mortgage interest for the second home may also flow if the loan is secured by that second home. If you take a HELOC on one home to purchase a second home, that interest will not be tax deductible. 

Finally, the amount of interest you can claim is limited to $500,000 (or $375,000 if filing Married Filing Separately) if the loan was secured after December 15, 2017. (There is an exception for sale contracts signed before December 15, 2017, but not closed until 2018). 

CLICK HERE for IRS Pub 936 HOME MORTGAGE INTEREST DEDUCTION


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