This column continues a series of discussions about the new tax law. Today I’ll address the home equity interest deduction and how to deal with the changes to the law.
Through the end of 2017 a homeowner could deduct interest on “acquisition” debt up to $1 million of principal, and could also deduct interest on “home equity debt” up to a principal balance of $100,000.
These terms are defined by the law and the definitions can be important in determining the allowed deduction, particularly in 2018 and future years.
Acquisition debt is debt incurred to acquire, construct, or improve a principal residence or one other residence selected by the taxpayer. The debt must be secured by the residence.