How the New Tax Law Could Affect Your HELOC

Tax reform has brought major changes for individuals and businesses, including what you can and can’t deduct on your 2018 federal return. Homeowners should pay particular attention to how the new law affects HELOCs and how higher mortgage loan limits could help.

New Tax Law Eliminates Some HELOC Interest Deductibility

The latest tax law includes several provisions that could impact how much interest you are allowed to deduct on your 2018 federal tax return. While complicated and filled with exceptions, many taxpayers will no longer be able to deduct the interest they pay on Home Equity Lines of Credit (HELOCs). 

Over the past 20 years many Americans have used HELOCs to consolidate credit card debt, pay college tuition and more--all while being able to write off the interest. With the elimination of that advantage, it might be time to consider consolidating your existing first mortgage and your HELOC to maximize the interest write-off potential. Contact a mortgage advisor to discuss your options, and be sure to consult with your tax advisor for specifics pertaining to this topic.

Higher Conventional Mortgage Loan Limits in 2018

For most of the U.S., the new loan limit will be $453,100, which is an increase from $424,100 on one-unit properties. Higher limits will be in effect for higher cost areas. For example, many Middle Tennessee counties will see increases of up to $494,500, while the limit will remain $453,100 in most of Pinnacle's other markets. These higher loan limits potentially could assist in refinancing HELOCs into first mortgages.