(The previous ceiling was $1.1 million for the first mortgage and home-equity debt combined.)
The reason, said Rosica, a widely recognized expert on real estate tax law, is that although Section 11043 of the new tax law eliminated home-equity debt interest deductions, it left virtually untouched interest deductions for primary home mortgage debt ("acquisition indebtedness") that is used to buy, improve or construct a new home.
However, interest on home-equity debt is not deductible if the proceeds are used to purchase tax-exempt securities and is generally not deductible for alternative minimum tax (Sec.
The home-equity debt category represents an exception to the general rule provided in Temp.
"Student debt now exceeds aggregate auto loan, credit card and
home-equity debt balances a making student loans the second-largest debt of U.S.
"While financial institutions may not be eager to provide home-equity lines of credit in the current environment, during the past several years the amount of
home-equity debt homeowners have layered on top of primary mortgages has risen to over $1 trillion.
Between mortgage financing and refinancing, along with increasing levels of
home-equity debt, many middle-income households are relying on their ongoing income to service a monthly mortgage.
Interest paid on other types of consumer loans is not tax deductible, but most homeowners can deduct interest on as much as $100,000 of
home-equity debt. You can usually borrow up to at least 80% of the home's value (minus any first-mortgage balance) at a rate that is only one or two points above prime.
(http://www.newyorkfed.org/index.html) The Federal Reserve Bank of New York has come out with data that indicates student debt figures have exceeded aggregate auto loan, credit card, and
home-equity debt balances, becoming the second largest debt of U.S.
Yet rising mortgage rates, an overhang of
home-equity debt for some homeowners, and sluggish average income increases also are making it tougher for many buyers now.
163(h)(2)(d), "qualified residence interest" (QRI) includes interest paid or accrued during the tax year on (1) acquisition debt on a taxpayer's qualified residence or (2) home-equity debt on a taxpayer's qualified residence.
There are certain circumstances in which home-equity debt proceeds could be used to allow interest to be deductible under other Code provisions.
