I have two mortgages – one for primary residence and one for investment property. I know that interest payment on both loans are tax deductible. But if I get a home equity loan against my primary home to pay off my high-interest car loan, the interest on this home equity loan is also tax deductible?
Home equity loan interest is tax deductible?
31
Mar
pega169
March 31, 2010 at 7:08 am
Yes.
Steve D
March 31, 2010 at 7:47 am
In most cases, yes. There are a few home equity loans that fall outside the tax deduction guidelines, but these are few. When getting the equity loan, check with the loan officer or someone at the loaning company to verify the interest is deductible.
?
March 31, 2010 at 8:14 am
Yes, as long as the principal on both loans does not exceed the value of your home.
v b
March 31, 2010 at 9:11 am
Also note, the interest would be added back for AMT purposes.
ninasgramma
March 31, 2010 at 9:40 am
Interest on home equity debt is tax deductible for loans which are the lesser of $100,000 or the equity in the home (the difference of the fair market value of the home and the current acquisition debt).
If you file a married filing separate return, the $100,000 figure above is replaced by $50,000.
There are rare exceptions to this for old loans or homes with acquisition debt in excess of $1 million. See IRS Pub 936.
http://www.irs.gov/publications/p936/ar02.html#d0e2135