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    vaidola's Avatar
    vaidola Posts: 3, Reputation: 1
    New Member
    		  
    #1

    Feb 19, 2008, 09:50 AM
    Write of Interest on Loans
    Hi,
    I carry two loans on my house (one primary loan as mortgage) and second one that I recently got is the Home Equity Loan (to invest in business startup). I know that I was able to write off the interest off my primary loan, but I want to know can I also write off the interest that pay on my Home Equity Loan or not.

    Any feedback or information will be appreciated.

    Thanks
    Raj
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
    Computer Expert and Renaissance Man
    		  
    #2

    Feb 19, 2008, 10:12 AM
    Genrerally yes. There are some rules about the total amount of interest you can write off. But interest on a HELOC is eligible for tax deduction.
    vaidola's Avatar
    vaidola Posts: 3, Reputation: 1
    New Member
    		  
    #3

    Feb 19, 2008, 10:20 AM
    Scott,
    Thanks for the reply and answer to my question. Do you know up to how much (total) interest I can write or at least where can I find that information (if I need to perform some calculations).

    Thanks
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
    Expert
    		  
    #4

    Feb 19, 2008, 11:31 AM
    The HELOC interest can usually be deducted, as long as it is a secured loan (that is, your house is collateral and its recorded as a 2nd mortgage). But since you did not take the loan to buy, build, or improve you home there are a few limits to be aware of:

    The amount of the loan can not exceed $100,000.
    The amount of the loan can not exceed the fair market value of the house minus the first mortgage loan amount.

    Interest on the portion of a loan above these limits can not be taken as a personal deduction. However, since the loan is for your business, you can treat it as a business expense on Schedule C.

    See Pub 936 for lots of details:
    Publication 936 (2007), Home Mortgage Interest Deduction
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