The tax law signed by President Trump in December seemed to kill the deduction for home-equity loans, spooking homeowners and home remodelers alike. But after pushback from The National Association of Home Builders and other lobbying groups, the Internal Revenue Service clarified that taxpayers can continue to deduct the interest owed on home-equity loans and home-equity lines of credit, as long as it’s for home improvement. Bloomberg reports:
The confusion stemmed from the law saying it was eliminating interest for “home-equity indebtedness.” Some borrowers, remodelers and others in the lending industry interpreted that as any kind of home-equity loan that taps equity to provide cash. But the tax code has long defined home-equity indebtedness as any kind of debt except loans taken out to acquire, construct or substantially improve a taxpayer’s residence.
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