HELOC and Second Mortgage Loophole
June 19, 2018
You may still qualify for the Home Equity Line of Credit deduction.
You may have heard that the 2017 Tax Cuts and Jobs Act did away with the deductibility of interest paid on a Home Equity Line of Credit (HELOC) or a second mortgage. While that is generally true, the IRS issued an advisory for taxpayers in February 2018 to clarify what is and is not deductible when using one of these financing instruments. If you use the funds to "buy, build or substantially improve the taxpayer’s home that secures the loan," then the interest is deductible (keeping in mind that the standard deduction was increased considerably, so that the deductibility of the interest may become a moot point). To fully explore this option, check out this article.
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