Home Equity Loans

The Tax Cuts and Jobs Act of 2017 suspends from 2018 to 2025 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. Under the new law, for example, interest on a home equity loan used to build an addition to an existing home is typically deductible, while interest on the same loan used to pay personal living expenses is not. As under prior law, the loan must be secured by the taxpayer's main home or second home, not exceed the cost of the home and meet other requirements.