Mortgage and Refinancing Information Channel:

We would like to thank the local libraries, schools, and universities for recommending students to visit us when doing research on any of our information topics.
 Please check back frequently as new topics are added and current topics are updated daily.

Home Equity Loan Tax Deductions

Interest - 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:

• Mortgages you took out on or before October 13, 1987 (called grandfathered debt).

• Mortgages you took out after October 13, 1987, to buy, build, or improve your home (called home acquisition debt), but only if these mortgages plus any grandfathered debt totaled $1 million or less ($500,000 or less if married filing separately).

• Mortgages you took out after October 13, 1987, other than to buy, build, or improve your home (called home equity debt), but only if these mortgages totaled $100,000 or less ($50,000 or less if married filing separately) and totaled no more than the fair market value of your home reduced by (1) and (2).

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

used office furnishings-supplies-equipment-desks-cubicles-service-counters for sale in Akron Ohio   Die cast model cars for sale in Akron Ohio  
used cars for sale in Akron Ohio   unfurnished homes for rent in Akron Ohio

RELATED MORTGAGE AND REFINANCING ARTICLES: Bad Credit Home Financing - Get The Mortgage Loan You Want Even With Poor Credit Having poor credit alone cannot hold you back from getting the home loan you want. Buying a home that is everything you want in a home, is a very exciting experience. Home Loans Buying a home remains the great American dream. Home ownership rates have been exploding in recent years, spurred on by the historically low interest rates in the home mortgage market. Subprime Mortgage Lenders - Helpful Tips When Getting a Subprime Mortgage Loan If you have bad credit history, no down payment or difficult to prove income and are looking to get approved for a home mortgage loan, you will probably need to look at subprime mortgage lenders to help you. To see a list of our recommended subprime mortgage lenders you can click on the link below. Fixed Rate or Adjustable? Fixed rate or adjustable rate mortgages are two choices of mortgage loans that most lenders will offer you. Your financial situation, how long you plan to live in the home, the current interest rates, and what risks you are willing to take is the best way to decide which loan makes the most sense for you. Home Equity Loans in Texas A few notes of importance: This only applies to a homestead property, that is the customers primary residence LTV refers to Loan to Value, meaning the loan amount as compared to the value of the home. As an example, a loan of $75,000 on a home valued at $100,000 would be a loan at 75% LTV. Your Mortgage Rate Compare and Save When trying to obtain the best mortgage rate compare offers from several lenders or brokers. Know how much of a down payment you can afford, and find out all the costs involved in the loan. Home Equity Loan vs. 401(K) Loan -- Which Should You Choose Home Equity Loan vs. 401(K) Loan. You've finally decided to add that patio you've always wanted to your home. Home Equity Loan - When Does Refinancing Make Sense? For the last two years, interest rates have been much lower than anytime during the last thirty years. This has resulted in an unprecedented boom in real estate sales, home refinancing and home equity lending, as borrowers try to take advantage of these rates for the long term. The Real Truth About Those: Online Get a Better Loan Web Sites - 6 Things to Look For You have seen the Commercials on TV go this or that web Site and Refinance your Home and Save thousands. Tempting isn't it? Do they really save you money?But what if you need help or Advice? What if you have questions? Can an online Internet Robot Design a Mortgage Plan customized for your unique situation. Home Loans: To Substantiate Financial Possibilities On Your Land Availability of Home loans is in full bloom. They are uncomplicated, tenable, easily available, very flexible and tailor-made for homeowners. Buy a Home With a Government Grant? Avoid this Scam If you watch enough late night television, you'll see advertisements that suggest that the Federal Government is giving all kinds of things away. You'll see ads for auctions that promise that you can buy a Ferrari for $500 or a home for $1000 through "government liquidations" or some such thing. First Time Buyer Home Loans - Things To Consider When Applying Online As a first time home buyer, there are several things you should consider when applying for a loan online. First, do you know what type of loan you want? Secondly, do you want personal service or better rates? And finally, how do you plan on scheduling in a home loan? Type Of Loan Mortgage loans come in a variety of financing forms to best suit your needs. Homeowner Loans - What's Available? It isn't difficult to get a homeowner loan if you own your own home, hundreds of UK lenders will lend up to 95% Loan to Value of your property and some as much as 125% Loan to Value if you find you have little or no equity at all. Homeowner loans are available to those that own or pay a mortgage on their house, bungalow, flat or cottage. Home Equity Loans - Are They Right For You? The bills are out of control and you need a new car. "Maybe we can get a new carpet and paint the house", you say to yourself. What is a Buy To Let Mortgage? A buy to let mortgage is a mortgage on a property which is to be let out or rented, rather than occupied by the owner. A buy to let mortgage is exactly as it sounds - a mortgage that allows you to buy a property in order to let if out to a tenant. Bad Credit Mortgage Lender - What to Look For If you have less than perfect credit and are looking to get approved for a mortgage loan, be careful not to make some common, costly mistakes. When dealing with sub-prime mortgage lenders or bad credit mortgage lenders, many people are taken advantage of because of their eagerness to get approved. Home Mortgage Loans - Fixed Rate, Adjustable or Balloon, Which One Is Right For You? When you're shopping for a new home-especially for the first time-all the terms and expressions may be confusing and difficult to understand. Adjustable rate, fixed rate, balloon payment - how do you decide which is the right type of home mortgage for you if you're not even sure what each of them are? The name of the mortgage type usually has to do with how you'll pay for your loan - how the interest on the loan is being determined by the bank. Remortgages Guide Outlined below is a useful remortgages guide. Remortgaging has become increasingly popular due to the relatively simple and flexible process. What Length Mortgage Is Right For You? You've found the home that is right for you, and now you need to do the same thing for a mortgage. There are several options for people out there, each one designed for a different type of buyer. Home Mortgage Loans For People With Bad Credit - 3 Ways To Improve Your Chances For Getting Approved Finding home mortgage loans are a reality for people with bad credit. By tapping into online home loan resources, you can find financing to buy a home.

HOME | SITE MAP © 2012 - 2025 All Rights Reserved Increase pagerank with HitsSurfer