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Passage of the Tax Cuts and Jobs Act (TCJA) in December 2017 has led to confusion over some longstanding deductions. In response, the IRS recently issued a statement clarifying that the interest on home equity loans, home equity lines of credit and second mortgages will, in many cases, remain deductible. How it used to be Under prior tax law, a taxpayer could deduct qualified residence interest on a loan of up to $1 million secured by a qualified residence, plus interest on a home equity loan (other than debt used to acquire a home) up to $100,000. The home equity debt could not exceed the fair market value of the home reduced by the debt used to acquire the home. For tax purposes, a qualified residence is the taxpayers principal residence and a second residence, which can be a house, condominium, cooperative, mobile home, house trailer or boat. The principal residence is where the taxpayer resides most of the time; the second residence is any other residence the taxpayer owns and treats as a second home. Taxpayers are not required to use the second home during the year to claim the deduction. If the second home is rented to others, though, the taxpayer also must use it as a home during the year for the greater of 14 days or 10% of the number of days it is rented. In the past, interest on qualifying home equity debt was deductible regardless of how the loan proceeds were used. A taxpayer could, for example, use the proceeds to pay for medical bills, tuition, vacations, vehicles and other personal expenses and still claim the itemized interest deduction. What is deductible now The TCJA limits the amount of the mortgage interest deduction for taxpayers who itemize through 2025. Beginning in 2018, for new home purchases, a taxpayer can deduct interest only on acquisition mortgage debt of $750,000. On February 21, the IRS issued a release (IR 2018-32) explaining that the law suspends the deduction only for interest on home equity loans and lines of credit that are not used to buy, build or substantially improve the taxpayers home that secures the loan. In other words, the interest is not deductible if the loan proceeds are used for certain personal expenses, but it is deductible if the proceeds go toward, for example, a new roof on the home that secures the loan. The IRS further stated that the deduction limits apply to the combined amount of mortgage and home equity acquisition loans, home equity debt is no longer capped at $100,000 for purposes of the deduction. |
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Do You Know Someone Looking To Buy or Sell? |
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It is a common misconception that a real estate agent primarily learns of someone looking to buy or sell a home when someone simply calls an agency looking for an agent to help them. Although this can happen, it is very rare. In fact, over 80% of the referrals I receive come from past clients and past coworkers just like you. The other 15-20% of referrals comes from our national network of relocation companies and other Coldwell Banker agencies across the country. The greatest compliment I can receive is when someone like you refers me to a friend, coworker or family member of theirs. If you, or someone you know, are looking to either buy or sell a home then I would certainly appreciate the opportunity to earn your business. Do you know of someone looking to buy or sell a home?  |
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Contact Brad Gough |
Bradley Thomas Gough Associate Broker  12401 Old Meridian Street Carmel, In 46032 Email brad@btgough.com Mobile (317) 590-3571 Office (317) 844-1131 Website www.btgough.com      |
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Charities Supported |
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There are so many great charities out there that and it is very hard to decide what to donate to. My wife Elissa and I have been very fortunate and have a good life. We simply can't donate to everything, however, we are very passionate about several different causes. We are sustaining members for the following organizations and encourage each of you to donate in any way you can to a cause that you are passionate about too. 
The American Society for the Prevention of Cruelty to Animals 
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