HELOC Interest changes for 2018…The interest is no longer deductible!

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Well that kind of sucks. I have many clients with Home Equity Lines of Credit for whom we take a mortgage interest deduction, but no more as of this year.

Things you may want to consider if you have HELOCs:

* Consider refinancing your home and use the additional mortgage loan to pay off your HELOC so that the interest you pay will then be considered eligible for deduction.

* Think long and hard about refinancing if your new mortgage would be a total of more than $750,000 because the new law does not allow for mortgage interest on any new loan amounts past the $750,000 point. You are grandfathered into the interest deduction on any mortgages that were already in place before the end of 2017, but NEW mortgages in excess of $750,000 will be affected by the new law. So refinancing in 2018 is risky if your loan will exceed $750,000.

* You will want to do an analysis of the cost of refinancing and what your effective rate will be once you consider the deductibility of the interest.

* HELOCs are still a good thing to have if you have the discipline to borrow against it and then pay it off pretty quickly. But if you use it as a funding option for spending more than you can afford, the interest is now not a tax deduction.

9 Deductions going away in 2018

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