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You can deduct interest on your acquisition debt only.
Acquisition debt is debt used to buy, build, or substantially remodel the home.
Let's suppose you bought the home for $150,000, with 10% down and a $135,000 conventional mortgage. You have paid off $10,000 and the current remaining balance is $125,000. You are not doing any remodeling. In that case, your current acquisition debt is $125,000, so that is the amount of HELOC balance that has tax deductible interest, no matter what amount you borrow. If you borrowed $150,000, then 83% of your interest would be tax deductible (125000/150000=0.833). Even though the original purchase price was $150,000, and the current value might be $180,000, your acquisition debt is limited to the amount of the remaining balance of the purchase mortgage that you plan to refinance.
Or, same set of facts, but you borrow $150,000 and use the other $25,000 to remodel the kitchen. In that case, you have $150,000 of acquisition debt, so all the interest is deductible.
Also, for loans made in 2018, there is a maximum deductibility of $750,000 of mortgage or HELOC debt.
You can deduct interest on your acquisition debt only.
Acquisition debt is debt used to buy, build, or substantially remodel the home.
Let's suppose you bought the home for $150,000, with 10% down and a $135,000 conventional mortgage. You have paid off $10,000 and the current remaining balance is $125,000. You are not doing any remodeling. In that case, your current acquisition debt is $125,000, so that is the amount of HELOC balance that has tax deductible interest, no matter what amount you borrow. If you borrowed $150,000, then 83% of your interest would be tax deductible (125000/150000=0.833). Even though the original purchase price was $150,000, and the current value might be $180,000, your acquisition debt is limited to the amount of the remaining balance of the purchase mortgage that you plan to refinance.
Or, same set of facts, but you borrow $150,000 and use the other $25,000 to remodel the kitchen. In that case, you have $150,000 of acquisition debt, so all the interest is deductible.
Also, for loans made in 2018, there is a maximum deductibility of $750,000 of mortgage or HELOC debt.
I pay my home off last year I pay 7000 to pay it off
@Jamesrjohnson You did not ask a question. Do you have a question? There is not a deduction for paying off your mortgage, if that was it.
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