Paying off (or down) a loan is not typically something that needs to be reported on your personal income tax return.
@Anonymous_ wrote:
Paying off (or down) a loan is not typically something that needs to be reported on your personal income tax return.
You will simply have less interest to report, and maybe a simpler calculation for deductible mortgage interest (if you still have a main mortgage).
Thanks! Are there any deductions, credits, or other tax benefits I can claim toward paying it off? Note this is not my primary mortgage, rather, a sidecar to the primary that was taken out at the same time as the primary mortgage
The only thing that is deductible would be any interest payments in the tax year you made prior to the payoff. But only if the HELOC funds were used to provide improvements to the personal residence that you used to secure the loan.
The only other thing to mention is that if you,
a. paid points on the HELOC to get a lower interest rate, and
b. you were deducting the points spread out over the life of the loan instead of deducting them all at once when you bought the home,
then you can deduct the remaining points as additional mortgage interest in the year you pay off the loan.
But I think most of the time, even if people pay points on the main mortgage, they don;t usually pay points on the HELOC.