Hi,

I have 2 questions:

Let's say I have a $45,000 home equity loan, and while I understand that it's tax-deductible, I don't take advantage and don't list this loan on my tax forms. What happens??

Also, what connection, or affect does this loan have on my original mortgage loan?

Hi googlestar. Welcome to AnswerPool.

quote:

What happens??

If you don't claim the interest you paid on your equity loan then you just don't get that amount taken off your income. You basically will not get as much of a refund as you should.

If you only claim your house on your taxes and not the loan then you just hurt yourself.

quote:

Also, what connection, or affect does this loan have on my original mortgage loan?

None. Your mortgage and equity line are two separate payments. You told the bank that you have at least $45,000 worth of your house paid for. They wrote you a check and you have to pay them back. You have 2 payments for your house each month. You used your home as collateral to take a second mortgage.

The only tax connection is that you should claim the interest for both your house mortgage interest and your equity loan interest.


If you didn't claim the interest then I suggest you amend your tax return and get the tax break you deserve.