News and Announcements

Message from the President/CEO

Dear Member,

I wanted to make you aware that Home Equity Loan and Home Equity Line of Credit (HELOC) interest deductibility has changed for existing loans as well as new loans.

The Tax Cuts and Jobs Act of 2017 suspended the deduction for Home Equity Loan and Home Equity Line of Credit (HELOC) interest from 2018 to 2026 unless the loan is used to buy, build, or substantially improve the taxpayer’s home that secures the loan. This change means that;

  • interest paid on loan proceeds used to pay for a kitchen renovation is still deductible,
  • interest on any portion of the same loan used to pay personal living expenses, such as consolidate credit card debt, is not deductible,
  • the amount of the loan may not exceed $750,000 or $375,000 for a married taxpayer filing a separate return. The limits apply to the combined amount of loans used to buy, build or substantially improve the taxpayer’s main home and second home.

As under prior law, the loan must:

  • be secured by the taxpayer’s main home or second home (known as a qualified residence),
  • not exceed the cost of the home.

Q: Are existing HELOCs grandfathered under the prior law?

A: Unfortunately, the Tax Reform Act did not grandfather the deduction of interest for existing loans, unless it meets the new criteria for tax deductibility.

Q: If a HELOC was originally for mixed purposes (for example to remodel a kitchen & pay off tuition charged to a credit card) is the interest paid on the qualified portion deductible?

A: Clarification from the IRS is needed to completely address this issue. Please consult your tax advisor with questions related to the tax deductibility of a Home Equity Loan or Line of Credit.

To learn more about Tax Reform click HERE.


John J. Shirilla

If you have a question or comment and would like to share it with the President/CEO, you can email him HERE.  Your security is our top priority. Please do not include personal information in this email; such as your Account Number or Social Security Number.

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