Reply to How did you pay for your renovations? HELOC? LOC? Cash? HEL?

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Reply to "How did you pay for your renovations? HELOC? LOC? Cash? HEL?"

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[quote=Anonymous]We could save for a couple of years and pay cash or use a HEL or HELOC.  HELOC seems like the way to go since you can write a check out of it as needed.  With a HEL you have to know the exact amount you're going to need up front to make the entire thing tax deductible (these loans are still deductible but only if used for home renovation and not paying off debt and other things).  
https://www.irs.gov/newsroom/interest-on-home-equity-loans-often-still-deductible-under-new-law

Example 1: In January 2018, a taxpayer takes out a $500,000 mortgage to purchase a main home with a fair market value of $800,000.  In February 2018, the taxpayer takes out a $250,000 home equity loan to put an addition on the main home. Both loans are secured by the main home and the total does not exceed the cost of the home. Because the total amount of both loans does not exceed $750,000, all of the interest paid on the loans is deductible. [b]However, if the taxpayer used the home equity loan proceeds for personal expenses, such as paying off student loans and credit cards, then the interest on the home equity loan would not be deductible.   [/b]

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