Have a home equity loan or home equity line of credit (HELOC), or thinking of getting one? Homeowners often tap their home equity for some quick cash, using their property as collateral, but watch out—you’ll want to know how this debt will be treated at tax time.
With the recently passed Tax Cuts and Jobs Act, the rules of home equity debt have changed dramatically. Here’s what you need to know about home equity loan taxes when you file this year (which is still under the old tax rules) and next, once the new tax code takes effect.
For starters, it’s important to understand the concept of “acquisition debt” versus “home equity debt.”