I was blessed to have money gifted to me from my parents from their LOC (line of credit). The LOC comes with a monthly payment which I am looking to pay so I get that tax benefit. I'm looking for advice on the best way to show payment on this loan so I can deduct for taxes. I currently have an S corp and would like to pay that payment through the business. Would it be better to pay it back directly to my parents? Or to pay the lender directly?
I am under the impression that the HELOC deduction has been eliminated
@Fahim Ahmad if the money is used for business purposes, the interest on a HELOC is deductible. In general, the federal government doesn't care HOW you borrowed the money, they care what the borrowed money was used for. If it is used for business, it is deductible.
There used to be an exception for HELOCs. You could borrow up to $100K and spend it on anything and the interest would be deductible. That exception has gone away. I think that is what you are referring to.
From@Steven Lewis 's description, his parents borrowed money thru a HELOC and gave it to him to use in his business. He will pay it back plus the interest the bank is charging the parents. He can write off that interest as a business expense. The parents will be issued a mortgage interest statement, but the interest is not deductible for the parents. They had no business motive in making the loan to Steven.