Darlees.com

Depending on how you used your home equity loan, there’re a number of tax deductions available for your home equity loan interest. The largest deductions are available for home improvements. However, for loans used to consolidate debt or pay for college, you can still deduct interest with some limits. And if you use the loan for investment purposes, you can also deduct interest charges.

Home Equity Loans Used For Home Improvements

Interest on home equity loans used to build or improve a first or second home qualifies for the home acquisition debt deduction. With caps at one million dollars, it has the largest limits. Any debt over this limit may qualify for the home equity debt deduction.

If you take out a home equity loan 90 days after you purchased the home, you can still deduct the interest even if you dont use the money for home repairs. By example, you buy a house May 1 with cash. May 15 you take out a home equity loan for $10,000 & use it to go on vacation. You can still deduct the interest paid since you secured the loan before 90 days after purchasing the house.

Home Equity Loans Used For Other Expenses

Paid interest on home equity loans used to pay for college, credit card debt, or other expenses qualify for tax deductions under home equity debt. However there’re limits on the debt amounts that qualify for this deduction.

The home equity loan amount must be less than $100,000 (or $50,000 if filing separately) or the fair market value of the house minus the acquisition mortgage. The interest on any debt above these amounts, how ever, may qualify for other tax deductions.

Deductions For Interest That Exceeds Limits

If you find that your home loan debt exceeds mortgage caps, you may still be easily able to deduct the interest as an investment cost or business expense. Otherwise, excess debt is considered personal debt & non-deductible. But the next year, your home equity debt interest debt may qualify if it meets all requirements. Before taking any tax deduction, verify that IRS rules have not changed in the preceding year.

Visit http://www.abcloanguide.com to find a list of reputable on line lenders for home equity loans. Also, view our recommended refinance lenders to find the best http://www.abcloanguide.com/refinance.shtml for you.

You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.