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interest deductible on 2015 heloc?

By Terry Savage on October 12, 2018 | Economy & Taxes

The bank where I have a heloc told me I should change the collateral from my house to my investments (IRA) so I can continue to deduct the interest on the loan. It is a big deduction on my income taxes. Several months ago you said the interest was still deductible under the Tax Reform.
The loan was taken out in 2014 or 2015. I’m 75 and confused about this. Thanks.

Terry Says

Well, yes and no on that. Here is the official ruling from the IRS:

“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.”

So if you used the money to remodel, the interest is deductible. But not deductible if you used it to pay off credit card debt!

Here is a link to the complete IRS memo.

One more issue: an IRA cannot be used as collateral against a loan. You must have misunderstood– or you have an ignorant “banker.” Get your tax advice from a CPA!

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