do you pay taxes on a home equity loan

Best answer


First,the funds you receive through a home equity loan or home equity line of credit (HELOC) arenot taxable as income- it’s borrowed money,not an increase your earnings. Second,in some areas you may have to pay a mortgage recording tax when you take out a home equity loan.

People also ask


  • Can I deduct my home equity loan on my taxes?

  • Even if you took out the loan before the new tax bill passed, you can no longer deduct any amount of interest on home equity debt. This new tax rule applies to all home equity debts, as well as cash-out refinancing. That鈥檚 where you replace your main mortgage with a whole new one, but take out some of the money as cash.

  • What is a tax statement for home equity loan?

  • This form is provided by your home equity loan lender and shows the total amount of interest paid during the previous tax year. Statement for additional interest paid, if applicable.

  • What is the new tax rule for home equity loans?

  • This new tax rule applies to all home equity debts, as well as cash-out refinancing. That鈥檚 where you replace your main mortgage with a whole new one, but take out some of the money as cash. For example, say you initially borrowed $300,000 to purchase a home, then over the course of time paid it down to $200,000.

  • Should you use equity to cover your tax bill?

  • As such, you won’t be able to get a tax break on the interest you will pay if you use equity to cover your tax bill, but you can still enjoy easy access to relatively low-cost funds. Fees for setting up a home equity loan can be minimal.

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