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Level 1

Is a HELOC on primary residence tax deductible?

 
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Level 9

Is a HELOC on primary residence tax deductible?

Interest on home equity loans or lines of credit are still deductible, but only if the loan is used to buy, build, or substantially improve the home and the total mortgage doesn’t exceed $750,000.

If the loan proceeds are used for something else (for example, to pay off debt) in 2018 through 2025, the interest is not deductible.

See this FAQ: https://ttlc.intuit.com/questions/4482873-which-federal-tax-deductions-have-been-suspended-by-tax-re...

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Level 9

Is a HELOC on primary residence tax deductible?

Interest on home equity loans or lines of credit are still deductible, but only if the loan is used to buy, build, or substantially improve the home and the total mortgage doesn’t exceed $750,000.

If the loan proceeds are used for something else (for example, to pay off debt) in 2018 through 2025, the interest is not deductible.

See this FAQ: https://ttlc.intuit.com/questions/4482873-which-federal-tax-deductions-have-been-suspended-by-tax-re...

Level 1

Is a HELOC on primary residence tax deductible?

What if you're only combining a first and second mortgage,  is that "buying" under this definition?
Level 9

Is a HELOC on primary residence tax deductible?

Is it a home equity line of credit or a conventional mortgage?
Level 1

Is a HELOC on primary residence tax deductible?

combining a 1st and 2nd mortgage into one Home equity line of credit.    option A no other debt paid off,  option B  pay off credit card debt, the first and second mortgage,  in that case would I need to keep track of the interest ratio of home mortgage payoff vs debt?
Level 20

Is a HELOC on primary residence tax deductible?

Acquisition debt is debt that was used to buy, build, or substantially remodel your home.   It doesn’t matter what form the acquisition debt is in.

 For example, if you bought your home with a combination of conventional mortgage and HELOC, then that is all acquisition debt.  Let’s say you bought your home for $100,000 with a $75,000 mortgage, a $20,000 HELOC, and $5000 cash down payment. You have $95,000 of acquisition debt.   You pay that down to $90,000 over the first couple of years.  Then you re-finance for $120,000.   Only $90,000 is acquisition debt, unless you use the balance of the refinance to substantially remodel the home.
Level 1

Is a HELOC on primary residence tax deductible?

Thank you.   So in this case I have a first mortgage to build the house,  2nd mortgage came when I finished the basement and built a detached garage.   so all of which would be considered acquisition debt.  Rolling those 2 mortgages into a single home equity line of credit if I paid nothing else off would still allow me to be able to deduct the interest on the heloc loan.  
Level 20

Is a HELOC on primary residence tax deductible?

Make sure you keep good records for as long as you own the house plus 3 years after you sell (7 years is better).  If the first mortgage was used to buy the house and the entire second mortgage (except for closing costs) was used for improvements, then both mortgages are acquisition debt and if you refinance them together as a new instrument, that amount of debt will still be considered acquisition debt, no matter what kind of debt instrument it is.  Anything extra you take out (except for closing costs) will be considered equity debt and the interest is not deductible.