 |
 |
Investing While Owning a Home: A HELOC May Be Your New Best Friend
By Jonathan Haeber
CMR Columnist
 E-mail Friend
 Printer Friendly
In some cases, having a home equity line of credit (HELOC) can mean more tax write-offs and additional savings for interest-bearing stocks or other beneficial investments. When the prime rate (the interest rate banks typically charge) was historically low, having a HELOC was a wise decision; you could write off interest on your income tax and earn interest on your investments. However, the HELOC-friendly home loan climate is beginning to change.
Now, as we enter are 16th consecutive interest rate hike by the Federal Reserve, it may be time to drop your HELOC. According to Bankrate, the rule of thumb is the rule of seven--if the interest rate climbs over the 7% threshold, then it may be time to pay off your HELOC by cashing in on your stocks, bonds, or other investments.
Decisions, Decisions. . . On Your Home HELOC
However, it's all a matter of personal circumstances and how much you need to use as a tax deduction. If you're in a higher tax bracket (typically earning over $100,000 a year) then you should consider retaining your HELOC. You can deduct the interest on your HELOC (along with other home loans) up to a maximum loan amount of one million dollars. If you decide to take even a larger loan through a HELOC, you may use that interest as a deduction for any amount up to an additional $100,000.
Consult the Pros
Tax laws are, of course, complicated and it's best to meet with your personal tax preparer or lawyer to discuss your own financial plans. It may seem counter-intuitive, but a HELOC loan may end up paying off in dividends if wisely invested!
Source
Bankrate: Deducation Limits on HELOC Interest
About the Author
Jonathan Haeber is a marketing writer for Discovery Channel Stores. He recently purchased his first home and took a self-taught crash course in home mortgages.
|
 |
|
|
|
|
