Question

2nd Mortgage Home Equity Loan Taxable Income

Forum|Forum|1 year ago
June 13, 2024
1 reply
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Hello,

Just to clarify, I'm not asking about tax deductions, I'm more concerned about paying additional tax on income.

I'd like to confirm that the sum of money wired to me from a Home Equity Loan will NOT be counted as Taxable Income at the end of the year.

Also, if the loan is given to me but the property is owned by 2 people, can both people on the title access that money without tax implications.

DoninGA

Employee

Funds received from a Home Equity Loan are never reported as taxable income on a tax return.

You only need to enter the interest paid on the loan as an itemized deduction on Schedule A, if the loan proceeds were used for home improvement on the property that secures the loan.

B

brunnerpdAuthor

Hello, Additional question to this topic. Our situation is slightly unique.

I am taking the 2nd mortgage loan in my name. The loan will be against the current property, which is owned by me and my partner. But she will not be listed on the loan, but she is on the title and loan of the property, so she is required to sign / approve the loan.

Question: Can we transfer the loan money from the mortgage company directly to my partner, without any tax implications. I realize that I do not have any issues, but we are wondering if we transfer the loan money to her, because she is not listed on the loan, does that create a taxable deposit?

DoninGA

Employee

Transferring the loan proceeds to your partner, who is also an owner of the property, does not create a taxable event for her and is not reported on a tax return.