Home Equity Loan Tax DeductionsInterest - is an amount you pay for the use of borrowed money. Several lenders are currently offering amazing deals for 125% home equity loans. As highly advertized as these loans are they don't highly advertize that the interest payments on these loans are not neccessarily fully tax deductable. To understand why these interest payments don't qualify as tax deductable lets look at what is considered a tax deductable interest payment. The IRS website states that to be considered for full tax deductable interest your mortgage must fall into one of these three catagories:
As described by the IRS to be considered as home equity debt the amount of the loan must be equal or less then the Fair Market Value of your home minus any outstanding debt from your first or second mortgage up to a loan amount of $100,000. For example, your home's fair market value is $150,000 your outstanding debt or mortgage is $115,000. This means the equity that you have built from your home is $35,000. Now your looking to cash in and a lender offers you a 125% home equity loan, 125% x $150,000 = $187,500 subtract your outstanding debt of $115,000 and you have qualified for a $62,500 dollar loan. So finally lets divide this loan into two parts. First $35,000 is your secured home equity debt and $27,500 is your unsecured home equity debt. The problem lies that as discussed before the tax exemption for interest payments only covers the secured home equity debt amount, leaving you with the financial liability of paying off the interst on $27,500 of your loan. *Their is a notable exception in regards to the purpose of the home equity loan. If the loan is used for home improvement it can possibly be considered as a "home aquisition debt" and the interest payments may be deductable for a loan greater then your actual equity value. The best course of action is to always speak to a tax advisor regarding any type of home loan. Being aware of tax deductions and liabilities can save you a huge headache and possibly thousands of dollars! Richard Mccaffery is owner of Home Equity Loan Lenders, a free content website meant to assist consumers in finding home equity loan information.
MORE RESOURCES updated Wed. April / 24 / 2024 Mortgage Interest Rates Today, April 24, 2024 | Rates Still Slated to Go Down This Year Business Insider 10-year refinance rates: What to know about the current market CNN Underscored Should You Refinance Halfway Through Your Mortgage? Bankrate.com MBA: Mortgage Applications Decreased in Weekly Survey Calculated Risk How to Refinance Your Mortgage NerdWallet Will Interest Rates Go Down in May 2024? | Mortgage Rates Forecast The Mortgage Reports 15-Year Mortgage Refinance Rates: Compare Current Rates Business Insider 30-Year Mortgage Refinance Rates Business Insider Average Mortgage Interest Rates: Mortgage Rates by Credit Score, Year, and Loan Type Business Insider Mortgage Interest Rates Today, April 22, 2024 | The Still-Hot Economy is Keeping Rates High Business Insider Only Half Of Black Seniors Approved For Home Repair Or Refinance Loans To Age In Place Block Club Chicago Mortgage Interest Rates Today, April 21, 2024 | Rates Remain Near 7% Business Insider How To Get The Best Refinance Rate Bankrate.com The best mortgage lenders for refinancing in April 2024 CNN Underscored Mortgage Interest Rates Today, April 19, 2024 | High Rates Make for a Challenging Homebuying Season Business Insider How To Choose The Right Kind Of Refinance For You Bankrate.com Should You Refinance Your Mortgage In 2024? Bankrate.com Mortgage Interest Rates Today, April 20, 2024 | Rates Remain Elevated, but They Could Fall Later This Year Business Insider Best Mortgage Refinance Lenders In 2024 Bankrate.com How To Refinance A Rental House Bankrate.com Current mortgage refinance rates CNN Underscored Best Refinance Lenders of April 2024: Refinance Your Mortgage The Motley Fool When to Consider Refinancing Your Mortgage Business Insider Best Mortgage Refinance Lenders of April 2024 Business Insider Mortgage Rates Chart | Historical and Current Rate Trends The Mortgage Reports Refinance Requirements: What You Need to Refinance Your Home in 2024 The Mortgage Reports How Soon Can You Refinance a Mortgage? NerdWallet How To Get A Home Equity Loan With Bad Credit Bankrate.com Mortgage Rate Forecast February 2024 Bankrate.com Refinancing a Home Equity Loan (2024 Guide) MarketWatch Conventional Refinance Rates and Guidelines for 2024 The Mortgage Reports How To Refinance An Underwater Mortgage Bankrate.com 30-year refinance rates: What to know CNN Underscored Mortgage Rate History: 1970s to 2023 Bankrate.com Current 15-year refinance rates — and lenders that offer them CNN Underscored When should I refinance my mortgage? To determine if a refinance is the right move for you, you’ll need to know the ... The Wall Street Journal Pros and Cons of a Cash-Out Refinance Bankrate.com Should I Refinance My Mortgage Now? When to Refinance As Rates Drop Business Insider What Credit Score Do I Need To Refinance? Bankrate.com Office of Research blog: A look at cash-out refinance mortgages and their borrowers between 2013 to 2023 Consumer Financial Protection Bureau The Sales Pitch for an 8% Mortgage: Buy Now, Refinance Later—for Free The Wall Street Journal With property values strong in 2023, many homeowners tapped home equity lines of credit, pushing total HELOC ... Miami Herald Mobile Home Refinancing | Loans & Rates 2023 The Mortgage Reports Will Mortgage Rates Go Down in 2024? What Homebuyers Should Expect Business Insider
|