Interest Deductions for Boston Home Owners

Despite widespread fears to the contrary, the IRS has clarified that last year’s big tax bill did not kill all interest deductions on home equity lines of credit (HELOCs) and equity loans. This is good news for Boston homeowners who opened a recent home equity line of credit and wish to receive a tax deduction. 

In a policy statement, the IRS said that it has received “many questions … from taxpayers and tax professionals” about HELOCs and equity loans in the wake of the Tax Cut and Jobs Act of 2017, which passed in December. That legislation eliminated a section of the federal tax code authorizing interest write-offs on “home equity indebtedness” from 2018 through 2025. But as noted in this column in January, the law did not curtail deductions on all HELOC and equity loan interest payments. It depends on how you use the money you borrow.

Taxpayers can “often still deduct interest on a home equity loan, home equity line of credit or second mortgage, regardless of how the loan is labeled,” said the IRS, provided the borrowed funds are used to “buy, build or substantially improve the taxpayer’s home that secures the loan” and the total debt on the house does not exceed statutory limits. There are some further details not to be missed to ensure you can take the deduction so please do check with your tax preparer. The Boston Herald also has a good run down of the policy on HELOC interest deductions. 

My specialty is working closely with my clients as a consultant (not just an “agent”) to provide the information and education critical to make those informed choices—at every step throughout the process. My comprehensive, high-quality services can save you time and money, as well as make the experience more enjoyable and less stressful. Please feel free to contact a Boston real estate agent, I look forward to hearing from you soon!

Lucas Garofalo

Keller Williams Realty

(617) 861-3631

Lucas@LucasBostonHomes.com

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