Some HECM interest deductions no longer allowed
Under the thin veneer of emotion lies the truth. What is the truth about home equity interest deductions versus mortgage interest deductions? The fact is home mortgage interest is still deductible but interest paid on home equity loans (HELOCs and some 2nd mortgages) are no longer deductible. Those with existing mortgages can still deduct the interest charged on up to $1 million financed. New home buyers are now limited to deducting interest on mortgages up to $750,000. Does this sound awful? It may be if you’re a higher net worth individual who will be purchasing a home over $750,000.
Reverse mortgage interest is deductible in many circumstances. However, there are some cases when it is not.
The Home Equity Conversion Mortgage is a mortgage in the truest sense, albeit a unique one. With no required monthly payments the HECM is a neg-am or negative amortization loan…