It’s been a tough 2019 tax season. The recent changes in federal tax laws made this tax season more difficult than usual. One of the biggest challenges has been determining what a business or individual could take as a deduction or ordinary and necessary tax expense. For example, interest paid on home equity loans may or may not be deductible under the new tax laws of 2017. In some states, this valuable deduction is no longer a tax benefit for many taxpayers.
“The Tax Cuts and Jobs Act of 2017, enacted Dec. 22, suspends from 2018 until 2026 the deduction for interest paid on home equity loans and lines of credit, unless they are used to buy, build or substantially improve the taxpayer’s home that secures the loan” (IRS.gov n.p.).
Although the intent of the law is clear, application could cause some confusion by homeowners that have refinanced their home mortgage many times over before passage of the new tax law. For complete guidance on how to calculate the correct interest rate for home mortgages, try IRS Publication 936, Mortgage Interest Deduction or submit our secure contact form with your specific tax question today.