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Home Improvement Loan Interest 2020

Forum|Forum|5 years ago
January 30, 2021
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I took out a personal loan from my credit union to pay a contractor to replace the roof and siding on my primary residence. (Roof had a leak, siding was loose). This was called a Home Improvement Loan by the CU and had requirements to be used for home improvements and couldn't be used for anything else (check was written to dual name me and contractor).

It was not what I believe is called a secure loan as there was no lien placed on the house it was personal loan or maybe called a signature loan?

Can I claim the interest on the loan under Deductions & Credits > Your Home > Mortgage Interest ... > "This is a seller-financed loan and I did not receive a 1098"?? or does it go somewhere else or not deductable?

TurboTax Home & Biz Windows

Best answer by ToddL99

No, you won't be able to claim a mortgage interest deduction for this personal loan since it is not secured by your home.

From IRS Publication 936 Home Mortgage Interest Deduction

You can deduct your home mortgage interest only if your mortgage is a secured debt. A secured debt is one in which you sign an instrument (such as a mortgage, deed of trust, or land contract) that:

Makes your ownership in a qualified home security for payment of the debt;
Provides, in case of default, that your home could satisfy the debt; and
Is recorded or is otherwise perfected under any state or local law that applies.

T

ToddL99Answer

No, you won't be able to claim a mortgage interest deduction for this personal loan since it is not secured by your home.

From IRS Publication 936 Home Mortgage Interest Deduction

You can deduct your home mortgage interest only if your mortgage is a secured debt. A secured debt is one in which you sign an instrument (such as a mortgage, deed of trust, or land contract) that:

Makes your ownership in a qualified home security for payment of the debt;
Provides, in case of default, that your home could satisfy the debt; and
Is recorded or is otherwise perfected under any state or local law that applies.