Pay off 15.9% CC with 12.9% loan – worth it?
Question: In the US, if you own your own home or have a mortgage, you may be able >to get a home-equity loan and borrow against your home. The interest on >home-equity loans is tax-deductible, because it’s essentially a >mortgage.
Answer: Interest on a home-equity loan is usually, but not always, tax deductible as mortgage interest. In general, if your first mortgage was under $500,000 and your home equity loan is under $100,000, and the total of your remaining first mortgage and your home equity loan do not exceed the original amount of indebtedness, then the interest is probably deductible. However, there are very specific guidelines that you should read before you count on the tax savings, particularly if you made a large down payment or your home has increased in value significantly since you bought it.
If you own a boat that has a bunk and a chemical toilet, you may also be able to deduct any interest on the boat by claiming it as a second home.
The tax laws just get wierder every year.
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