Is there an income limit for deducting HELOC interest?

[DianeW · Accepted solution]

There is a possible limit on the home equity line of credit (HELOC) and overall itemized deductions if you income is above a certain threshold.

Home equity debt limit.   There is a limit on the amount of debt that can be treated as home equity debt. The total home equity debt on your main home and second home is limited to the smaller of:

• $100,000 ($50,000 if married filing separately), or

• The total of each home's fair market value (FMV) reduced (but not below zero) by the amount of its home acquisition debt and grandfathered debt. Determine the FMV and the outstanding home acquisition and grandfathered debt for each home on the date that the last debt was secured by the home.

Itemized Deduction Phaseout:  You are subject to the limit on certain itemized deductions if your adjusted gross income (AGI) is more than $311,300 if married filing jointly or qualifying widow(er), $285,350 if head of household, $259,400 if single, or $155,650 if married filing separately. Your AGI is the amount on Form 1040, line 38.