I'm Lucy, and I'd be happy to answer your questions today.
People who itemize their deductions on a Form 1040, Schedule A, may be eligible to deduct some of the interest on their Home Equity Loans. You're eligible to itemize deductions if the total of all deductions is more than your standard deduction for your filing status (which it usually would be, if you're including interest on a mortgage or home equity loan). You also must have obtained the loan after 1987.
What you're allowed to deduct is interest on $100,000 of the home's value ($50,000 if you're filing Married Filing Separately) or total amount of equity in the home. Any interest on the remaining balance is considered personal loan interest and would not be deductible. So, for example, if your home is worth $100,000 and you have $75,000 worth of loans, you can deduct the Home Equity Loan interest paid on $25,000.
Here is more information:
If you have any questions or concerns about my response, please reply WITHOUT RATING. It's important that you are 100% satisfied with my courtesy and professionalism. Otherwise, please rate my service positively so I am paid for the time I spend answering questions. If you are on a mobile device, you may need to scroll to the right. There is no charge for follow-up questions. Thank you.