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.
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:
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 updated Mon. March / 08 / 2021
Today's mortgage refinance rates — 30-year rates sit at the lowest seen in 13 days | March 5, 2021 - Fox Business
Today's mortgage and refinance rates: March 7, 2021 | Rates go down - Business Insider - Business Insider
Today's mortgage and refinance rates: March 7, 2021 | Rates go down - Business Insider Business Insider
Today’s mortgage refinance rates mixed — one key rate drops while another rises | March 2, 2021 - Fox Business
Today’s mortgage refinance rates mixed — one key rate drops while another rises | March 2, 2021 Fox Business
Can refinancing a mortgage hurt my credit score? Fox Business
Best mortgage refinance lenders in 2021 Bankrate.com
Best cash-out refinance lenders in 2021 Bankrate.com
Is now still a good time to refinance a mortgage? The Philadelphia Inquirer
Mortgage rates are falling to unprecedented lows in 2021 — refinance now to save money - Q13 FOX (Seattle)
Mortgage rates are falling to unprecedented lows in 2021 — refinance now to save money Q13 FOX (Seattle)
Mortgage Recast: How to Reamortize and Save Money Credible News
What Are The Benefits Of Cash-Out Refinancing? Is It Worth It? The Mortgage Reports
Refinance Loans Propel Yet Another Increase In Home Mortgage Lending Activity During Fourth Quarter Of 2020 - PRNewswire
Refinance Loans Propel Yet Another Increase In Home Mortgage Lending Activity During Fourth Quarter Of 2020 PRNewswire
What Is a Mortgage and How Does It Work? | Mortgage 101 The Mortgage Reports
Can Closing Costs Change On The Closing Disclosure? The Mortgage Reports
How Long Does Underwriting Take? Is 'No News Good News'? The Mortgage Reports
Top 5 mortgage refinance questions answered Fox Business
How to decide if you should refinance your mortgage Fox Business
Pros and cons of a cash-out mortgage refinance Fox Business
How to refinance your mortgage Fox Business
Mortgage refinance: Everything you need to know Fox Business
How do I get the most out of my mortgage refinance? Fox Business
What are the hidden costs of refinancing a mortgage? Fox Business
Who's exempt from the new mortgage refinance fee? Fox Business
Everything You Should Know About The New Mortgage Refinancing Fee That Goes Into Effect Dec. 1 - Forbes
Everything You Should Know About The New Mortgage Refinancing Fee That Goes Into Effect Dec. 1 Forbes
Mortgage refinance rates continue hitting record lows – here’s how to get the best deal now - Fox Business
Mortgage refinance rates continue hitting record lows – here’s how to get the best deal now Fox Business
How to refinance your mortgage in 5 easy steps Fox Business
Mortgage refinance applications soar despite a new fee that increases the cost - Pittsburgh Post-Gazette
Mortgage refinance applications soar despite a new fee that increases the cost Pittsburgh Post-Gazette
The best mortgage refinance lenders of March 2021 Business Insider
Refinancing your mortgage? Don’t make this mistake Fox Business
4 ways to get lower mortgage refinance rates Fox Business
Despite low mortgage interest rates, homeowners should research the caveats before reﬁnancing - Seattle Times
Despite low mortgage interest rates, homeowners should research the caveats before reﬁnancing Seattle Times
A record 19.4 million homeowners can now save big on a mortgage refinance, as rates hit another new low - CNBC
A record 19.4 million homeowners can now save big on a mortgage refinance, as rates hit another new low CNBC
5 reasons to refinance your mortgage right now HousingWire
10 things to know before refinancing your mortgage Fox Business
How to Refinance Your Home | Home Lending Chase News & Stories
3 Mortgage Refinance Strategies to Consider in 2021 The Motley Fool
Complete Checklist of Mortgage Refinancing Requirements Credible News
10 tips for getting the best mortgage refinance rate, from checking your credit report to choosing the right lender - Business Insider
10 tips for getting the best mortgage refinance rate, from checking your credit report to choosing the right lender Business Insider
USDA Construction Loans | Buy Land & Build A Home With USDA The Mortgage Reports
Jumbo Mortgage Refinance Rates for March 2021 NextAdvisor