HELOC interest deduction - New Tax Law

[Alik Levin]

Dear all,

What's the definitive answer - and preferably pointer to authoritative resource - regarding deductability of interest on HELOC with the passage of new Tax Law?

I do realize that HELOC interest deduction now only limited to personal residence home improvement expenses.

But is it also true using HELOC on real estate investment other than your personal residence is NOT deductible even for the first $100K borrowed?

Thank you

[Ashish Acharya]

@Alik Levin , 

No, if you use the HELCO for the business activities, the interest on the HELCO is deductible as business interest expense. (This has never been changed).  The HELCO is no different than any other business Loan that you take out of the business activities. 

For eg., if you had a home depot card that you use for rehab, the interest on the loan that you used to rehab the property is a business expense.  If the proceeds are used for a personal purpose, the interest is not deductible. 

So, you can use the proceed for 

1) Rental activities - the interest would go against rental income or capitalize depending on how it was used. 

2) investment - the interest would be investment interest expense 

3) Trade or business - interest would be a trade or business interest expense. (There are some Limitation here)