HELOC: Is the Interest Tax-Deductible? - YouTube

our HELOC interest tax-deductible in this video and I'm going to answer that

question as well as dispel some myths and rumors about he lops not being tax

deductible especially when you're using a HELOC to pay off your mortgage

hey what's going on real this is Sam Kwok here one of the Popular's and

chances are you've seen some of my other videos about using a HELOC to pay off

your mortgage and very often I get questions about he locks not being tax

deductible right you know hey Sam I heard that he live taxes are not

deductible when I file my taxes therefore I don't think this strategy

makes sense why would we use a HELOC to pay off our mortgage if we can't deduct

the taxes right and I probably get this question almost every single day so I

finally came around to make a video to answer that question for you guys and by

the way if you want more videos about using a heal after paying off your

mortgage as well as investing in real estate and buying rental property

definitely subscribe to a channel if you want more videos just like this and as

always just disclaimer I am NOT a CPA I am NOT an attorney so therefore please

don't take this as a tax advice this is simply my interpretation of the tax laws

when it comes to using a HELOC to paying off your mortgage so make sure you talk

to your CPA so that you get the correct information based on your own unique

situation now right out of the gate when people ask me about helix not being tax

deductible they're also referring to the second lien position

HELOC and unfortunately people automatically assume that all he laughs

are not tax deductible because they seen some video on YouTube and they watch

then Dave Ramsey who are they seen some other people that talk about this but it's

simply not true now it is true that the interest on a second lien position HELOC

is not deductible under taxes when used to paying off your mortgage prior to

2018 the tax laws were a little bit different where you could have been able

to go and deduct the interest on a second lien position HELOC but that has

changed after 2018 however my argument to this is that if you're using the

accelerated banking strategy using a HELOC to paying off your mortgage you

can potentially save several hundreds of thousands of dollars on interest and

save several years on paying down your mortgage remember a loan on a 30-year

amortization can cost quite a bit when it comes to the interest for example

let's say you have a hundred thousand dollar loan with a three percent

interest rate on up there your amortization at the end of the 30

year payoff period you would have paid approximately 51,000 dollars of interest

so that's effectively 51% effective interest rate unfortunately for some

people the logic is to go and pay that amount for the interest just so that

they can save couple thousand dollars on the taxes and another example it's kind

of like my friend who bought a forty five thousand dollar truck just so that

he can get a business tax write-off and he said you know Sam I saved a couple

thousands of dollars on my taxes well first of all he lives in the city second

thing he probably uses a truck maybe once every month right so he literally

spent forty five thousand dollars cash just so that he can save a couple

thousands of dollars and he's not using the truck but it's kind of like the old

logic of tripping over a quarter just to pick up a penny so had he not spent that

forty five thousand dollars paid a little bit of taxes he could have used

that money to go and buy rental properties or to go invest in stocks or

do something else rather than spending forty five thousand dollars on the truck

that's sitting in a parking garage or you can use that money to go and

smash the like button on this video for the YouTube algorithm though bottom line

do you really want to pay that much of interest just to get a tax write-off or

save that money pay little bit of taxes and come out ahead with a net positive

so even if the second lien HELOC interest is not tax-deductible the

savings to get by using the strategy still outpaces the amount of money

you're saved by using the interest as a tax write-off instead of straight up

paying the interest plus the amount of time you'll save is gonna be

astronomical so you definitely don't want to miss on that but there is a

potential way of making all of your HELOC interest becoming tax-deductible

and again I'm not a CPA this is not a tax advice please go do your own

research and consult your own CPA now there's a little less known version of

the HELOC known as the first lien HELOC and of course if there's a second lien

HELOC there's got to be a first thing he'll hug right so a first thing HELOC

is essentially the only loan on your property so if you already have a

mortgage and you go and get a first thing HELOC if first thing he lock will

replace your mortgage so it'll be the only loan that only mortgage that you'll

have on your property by getting a first thing he lock not only do you get the

advantage of using a revolving line of credit but you can also potentially

write off the entire interest amount that you would pay on a first lien

Keylong and also not too many firstly HELOC interest rates are very

comparable to 30-year fixed-rate so the argument that the HELOC interest rates

are higher than our 30-year mortgage is simply not true and that goes out the

window many of the students on my program has

already completely replaced their mortgage with the first lien HELOC which

gives them the ability to pay down their mortgage faster and also use that first

thing HELOC later on to go and buy more rental properties that if they want to

many of them will end up potentially paying off their HELOC within five to

ten years saving them several hundreds of thousand dollars of interest and

getting to deduct the little interest that they would end up paying using the

strategy so if you have not seen my video of using the he'll off to paying

off your mortgage or completely replacing your mortgage in the first

place go and definitely check out that video

I'll leave that video down below in the video description all you have to do is

click and go and check out what the strategy is all about so there you have

it folks if you've been wondering about the tax deductibility on a HELOC

interest I hope this video answers your question so if you want more information

about the strategy as well as getting help from us in paying off your mortgage

using a HELOC go and download our calculator to see how much you can

potentially save not only we're time but also the amount of interest that you'll

save using this strategy and again I'll leave that link down below in the video

description of this video if you enjoyed this video so far go and subscribe to a

channel if you want more information about paying down your mortgage faster

using a HELOC as well as buying rental property real estate definitely go and

subscribe and check out some of the other videos that we have