Home Equity loan interest not be deductible?
Home Equity loan interest not be deductible?
Trick answer: None. However, note the definition of "home equity interest"
that is used in the IRC.
Understandable answer:
1) If the amount of the loan principal exceeds $100K. In that case, only
interest attributable (and prorated by the ratio of principal:$100K) will count
as home equity interest expense. The remainder is considered personal
interest, which under current law is not deductible.
2) If the property secured is NOT your principal residence nor the one other
that you've declared the purposes of other deductions (where required - see the
"vacation home" rule), then the equity interest expense doesn't qualify.
However, if the property is used as a rental property, then you may get a
deduction on Schedule E if the proceeds are used for the rental.