Note: The editors of Kiplinger's Personal Finance magazine and the Kiplinger Tax Letter are answering questions about the new tax law from subscribers to our free Kiplinger Today daily email. See other reader Q&As about the new tax law, or submit your own question.
Question: I understand that the new tax law eliminates the deduction of interest on home-equity loans. But, will there be an exception if the loan is used to improve a home, such as remodeling or building an addition?
Answer: Yes. As in the past, home-equity loan proceeds used to substantially improve a home are considered acquisition indebtedness, so the debt falls under the rules that permit interest on up to $750,000 of such debt to be deducted. For debt secured by a first or second home and incurred before December 15, 2017, interest on up to $1 million can be deducted. The $750,000 cap applies to debt incurred after December 14.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Under the old law, interest on home-equity debt that did not qualify as acquisition indebtedness (because it was used for purposes other than to buy, build or improve a first or second home) could be deducted. That’s the write-off Congress abolished, starting in 2018, for both new and old loans.
-
Five Medicare Changes Coming in 2026Learn about the benefits that become permanent features of Medicare in 2026 and how they have been changed or updated since their inception.
-
Discover Which Five States Have AAA Offices Offering Real ID Services. Learn What You Need To Do To Take Advantage of Them.A trip to the DMV can be a painful experience. Skip the line and visit your AAA office to get your REAL ID (select states only).
-
Big Tax Deduction Increase Proposed for Those Over Age 65Tax Deductions A new bipartisan bill could mean bigger retirement tax savings to offset taxes on Social Security and high prices.
-
Ten Cheapest Places To Live in New YorkProperty Tax If you’re planning a move in New York, here are the counties with the lowest property tax bills in the Empire State.
-
‘My Etsy Shop is Dead’: Vendors Cry for Help Amid Trump’s TariffsTariffs Small businesses are struggling to thrive as they absorb the Trump administration’s new wave of tariffs.
-
New HSA Contribution Limits Are Set for 2026: What to Know NowHealth Savings The IRS says Health Savings Account contribution limits will increase again next year due to inflation.
-
Three Things Star Wars Fans Taught Me About TaxTax Tips May the force be with you and your taxes this Star Wars Day 2025.
-
Retirees: Don’t Miss These Valuable State Tax Breaks in 2025Retirement Planning Selecting the right state for retirement can significantly impact your financial well-being.
-
10 Cheapest Places To Live in FloridaProperty Tax Make your Florida vacation spot a place for daily living — these counties have the lowest property tax bills in the state.
-
Trump’s Tax Cut Risks Your SNAP, Medicaid BenefitsTax Cuts The GOP budget blueprint could slash lifesaving programs for millions of U.S. households.
