can I deduct home equity loan interest?

  • where can i deduct home equity loan interest
  • if you have no mortgage and want to take out a home equity loan , is the interest deductible?
  • I was in foreclosure last year.The interest was added to loan.I didn't recieve  a slip saying how much it would have been.Is this deducible and how much can i use?
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Home equity loan interest is tax deductible subject to certain limits.

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.
Example.
You own one home that you bought in 2000. Its FMV now is $110,000, and the current balance on your original mortgage 
(home acquisition debt) is $95,000. Bank M offers you a home mortgage loan of 125% of the FMV of the home less any outstanding mortgages or other liens. To consolidate some of your other debts, you take out a $42,500 home mortgage loan [(125% × $110,000) ? $95,000] with Bank M.Your home equity debt is limited to $15,000. This is the smaller of:$100,000, the maximum limit, or
$15,000, the amount that the FMV of $110,000 exceeds the amount of home acquisition debt of $95,000.

Source: http://www.irs.gov/pub/irs-pdf/p936.pdf
  • So- I seem to qualify to deduct my home equity loan interest - how do I enter this on TurboTax?
  • You enter it the same way you enter other mortgage interest. You can simply add another lender from whom you got the Home equity loan.
  • how do I answer the question about length of the loan, since it actually is an open loan?
  • I have the same question.  What do I enter for the length of my home equity loan?
  • In my experience with two home equity loans, which are "open" in the sense that I can borrow up to the maximum value of the loan if I need to, there is a stated length of time in which I have to pay back the money borrowed. In the first case, it was ten years. At the end of those ten years, since it wasn't paid off, I had to obtain a new home equity loan. In the second load, the term is 15 years. So for IRS purposes, I would have stated 10 years for the first loan and 15 for the second.
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Turbo Tax is HORRIBLE when it comes to helping people figure out how and where to enter the interest paid on a home equity loan. I fully belive they don't want you to know, that's why they don't answer this question and they don't put any information into Turbo Tax about it. You are on your own. Intuit doesn't care.
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