For years, Americans could borrow against their homes to pay for a new car, college tuition, or even a trip to the Caribbean, and then deduct the interest on those loans. However, last year’s tax overhaul prohibited interest deductions for home-equity loans and home-equity lines of credit, known as Helocs, unless the funds are used for certain types of home improvements, according to a Wall Street Journal commentary. The change took effect for 2018 and will affect many people. As of March, there were 4.2 million home-equity loans with balances totaling $127 billion, and 9.3 million Helocs with loan balances totaling $419 billion, according to Equifax Inc. The prior tax law allowed homeowners to deduct interest on up to $100,000 of home-equity debt used for any purpose.
