Interest on home equity loans is still deductible, but with a big caveat
Many feared that the new tax law — the Tax Cuts and Jobs Act of 2017, enacted in December — was a death knell for deducting interest from home equity loans and lines of credit. These loans are based on the equity in your home and are secured by the property. (Home equity is the difference between what the house is worth and what you owe on your mortgage.)
According to an Internal Revenue Service the advisory, the new tax law suspends the deduction for home-equity interest from 2018 to 2026 — unless the loan is used to “buy, build or substantially improve” the home that secures the loan. If you take out the loan to pay for things like an addition, a new roof or a kitchen renovation, you can still deduct the interest. But if you use the money to pay off credit-card debt or student loans — or take a vacation — the interest is no longer deductible.