Home Equity Indebtedness under New Bill
By Traci A. Malik, CPA/CFF CFE MAcc
With the passage of the new tax overhaul bill, came a change to the deductibility of home equity loans and lines of credit. The new law suspended the deduction for interest on home equity indebtedness. Period. So, everyone read that as all home equity indebtedness and were infuriated. But, the IRS has come out and clarified that the home equity indebtedness and lines of credit due to getting bombarded by questions from taxpayers and tax professionals. According to the IRS, the interest is still deductible as long as the funds were used to buy, build or substantially improve the taxpayer’s home that secures the loan. If the funds were used to pay off credit card debt or other personal living expenses, the interest is not deductible.