Home-equity loan deduction can be tricky
• When someone takes out a home-equity loan, how can they calculate the percentage of the interest that is tax deductible when filing income tax returns?
Cutting it kind of close, aren’t you? Anyway ...
There are quite a few variables that go into calculating the proper amount of deductible interest on mortgage or home-equity loans. They include your filing status, the fair-market value of your home, origination dates of previous mortgages and remaining debt.
To address your particular situation, you might want to get your hands on one of two things.
The first is IRS Publication 936, Home Mortgage Interest Deductions. The publication offers a thorough explanation of how such calculations are made, and it includes a handy flowchart to help determine if all or part of your mortgage or equity interest is deductible. You can pick up a copy at your nearest federal building or download one at www.irs.gov.
