![]() |
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.
Mortgage and refinance rates today, July 26, 2024: Rates are well below their 52-week averages Yahoo Finance Mortgage and refinance rates today, July 24, 2024: Rates have staggered since last week Yahoo Finance Today's Mortgage Rates by State – July 26, 2024 Investopedia Mortgage Interest Rates Today, July 26, 2024 | Rates Steady After Falling Earlier This Month Business Insider Average Mortgage Interest Rates: Mortgage Rates by Credit Score, Year, and Loan Type Business Insider Mortgage Recasting: What It Is And How It Works Bankrate.com How to Refinance Your Mortgage NerdWallet Jumbo Loan: Definition, Rates, and How to Qualify Business Insider Current Mortgage Trends: Are Mortgage Rates Going Down? Business Insider Best Mortgage Refinance Lenders of July 2024 Business Insider 30-Year Mortgage Refinance Rates Business Insider How Much Does It Cost to Refinance? Average Closing Costs by State Business Insider FHA Refinance Rates: See if You Could Lower Your Rate Business Insider How To Refinance An Underwater Mortgage Bankrate.com Mortgage Interest Rates Today, July 24, 2024 | Rates Hold Steady Business Insider Rocket Mortgage Review 2024 Bankrate.com Current VA Refinance Rates: See if Refinancing Is Worth It Right Now Business Insider Understanding 30-Year Mortgage Rates: A Comprehensive Guide Business Insider Today's Mortgage Rates by State - July 24, 2024 Investopedia Best Refinance Lenders of July 2024: Refinance Your Mortgage The Motley Fool Mortgage refinance demand drops further, despite homeowners sitting on $17 trillion in equity - CNBC Current Home Equity Loan Rates: Your Guide to the Best Rates Business Insider What current mortgage refinance rates mean for your situation CNN Underscored Mortgage Interest Rates Today, July 21, 2024 | Rates Are Down This Month. Will They Continue to Drop? Business Insider Mortgage Points: What Are They And How Do They Work? Bankrate.com Assumable Mortgages 2024: How They Work, Benefits, and Insights Business Insider Refinance applications increase despite overall drop in mortgage activity Mortgage Professional Real Estate Housing Market 2024: Will Home Prices Drop? Business Insider Is it Time to Refinance Your Mortgage? That Depends on When You Closed The Wall Street Journal Refinance Rates Today: Compare Mortgage Refinance Offers Business Insider Mortgage refinance demand jumps to two-year high Morning Brew Should You Refinance Your Mortgage In 2024? Bankrate.com MBA: Mortgage Applications Decreased in Weekly Survey Calculated Risk Discover Home Loans Review: Learn About Discover Home Equity Loans and Mortgage Refinancing Business Insider 15-Year Mortgage Refinance Rates: Compare Current Rates Business Insider Mortgage Rate History: 1970s To 2024 Bankrate.com How To Get The Best Refinance Rate Bankrate.com Tremont Realty Capital Announces the Closing of a $27 Million Mortgage Loan to Refinance an Industrial Property in Wayne, PA Business Wire Housing Market Predictions 2024: What Homebuyers Should Know Business Insider Do I Need Money Down To Refinance My Mortgage? Bankrate.com The Ascent's Complete Guide to Mortgages The Motley Fool Types of Mortgage Refinance Options Bankrate.com Cash-Out Refinancing: What It Is, How It Works Bankrate.com Cash-Out Refinance For Home Improvements Bankrate.com Should You Refinance Halfway Through Your Mortgage? Bankrate.com Mortgage Interest Rates Today, July 22, 2024 | Rates Are Dropping. How Low Could They Go? Business Insider What Credit Score Do You Need To Refinance? Bankrate.com Are Cash-Out Refinance Rates Higher? Bankrate.com Loan Modification Vs. Refinance Bankrate.com Best Student Loan Refinance Companies of 2024 Business Insider
|