Loan & Credit Line Tax Savings Calculator Overview
Generally, the interest paid on a home equity loan or home equity line of credit (HELOC) is tax-deductible for borrowers who itemize deductions. Single borrowers may deduct the interest paid on up to $50,000 in home equity debt, exclusive of their primary mortgage, while couples filing jointly can deduct interest paid on up to $100,000 in home equity debt. Other rules may apply, so you should consult your tax advisor to determine what guidelines apply to your specific tax situation as it relates to loans and credit lines.
More detailed explanations of the tax deductibility guidelines for home equity loans and HELOCs are provided at the bottom of the page, which may help clarify things for you. If you're not sure if you're eligible, check the explanations in the last two sections on this page.
How to Use the Loan & Credit Line Tax Savings Calculator
Here's what to do:
- First, decide whether you want to calculate based on your monthly payment, or your loan amount – and select the appropriate choice
- Choose your payment option from the drop-down list – for most people the default option of ‘a fixed term loan’ will be appropriate
- Depending on the option you selected at stage 1, enter wither the Loan amount or your monthly payment
- Add the interest rate that you are paying on your loan or credit line, and the term in months
- Input your federal tax rate and state tax rate
- Click "View Report" to see how much tax you could be saving.
If you like what you see, feel free to click the "Get FREE Quote" button to find out what kind of terms you would be offered on your loan.
Who is this Calculator for?
This calculator is most useful if you:
- Are taking out a home equity line of credit (HELOC) and would like to calculate the potential interest savings you can make via tax deduction
- Want to see a clear breakdown of your loan or line of credit amortization schedule
Under what circumstances are HELOC interest payments tax deductible?
Interest paid on home equity loans and lines of credit totalling $100,000 or less that were taken out after October 13, 1987 is usually tax-deductible for couples filing jointly. For single filers or married persons filing separate returns, the maximum threshold goes down to $50,000. Either way, the amount must not exceed the fair market value of the property, minus the grandfathered debt and home acquisition debt.
What is grandfathered debt and home acquisition debt?
Grandfathered debt is simply the term commonly used to describe mortgages taken out before October 13, 1987. Home acquisition debt includes mortgages taken out after this date for the purpose of buying, building or improving a property. The maximum threshold for home acquisition debt to be tax deductible is $1 million, or $500,000 if you are single or married filing separately.