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Home Equities and Tax Reform - What You Need to KnowOn December 22, 2017, President Trump signed the tax reform bill into law, which makes a number of significant changes to the tax code, including doing away with the deduction paid on home equity loans. The purpose of this article is not to offer any tax advice, but to provide information on how this change could affect those who have a home equity loan or line of credit.What are home equity loans?An article from marketplace.org defines them this way: “These loans are secured by the amount of equity a homeowner has in his or her home. Home equity is defined as the difference between the value of a home and the remaining balance on the mortgage.” Homeowners have two options: a home equity loan, in which the borrower secures a specific loan amount with a fixed interest rate, or a home equity line of credit, which has a credit limit based on the home’s equity. These loans are typically variable rate loans. How does the bill affect borrowers who have a home equity loan or line?The article goes on to explain that in the past homeowners could deduct the loan’s interest up to $100,000 from their taxes. According to the new law, this deduction ended in 2017, making it the last tax year that homeowners can deduct the interest paid on home equity loans and line from their taxes.
And while it is natural to lament the end of the tax deduction, there are several things to consider: - The new tax law increases the standard deduction to $12,000 for single filers and $24,000 for joint filers. For many homeowners it may no longer make sense to itemize deductions, meaning taking the mortgage interest deduction and property tax deduction. It may make more sense for homeowners to simply take the standard deduction.
- Even with the loss of the tax deduction, a home equity line or loan may still be the lowest cost of credit in the market today. For example, a home equity line of credit based on Prime as listed in the Wall Street Journal with a margin of 0.00% would have an APR (annual percentage rate) of 4.50%. According to creditcards.com, the regular APR for a credit card for those with excellent credit (defined as a score of 740 to 850) ranges from 12.24% to 24.99%.
- The credit limits obtained for a home equity loan or line of credit can be much higher than those for unsecured credit, such a credit card. If you have a big home improvement project, college tuition or another large purchase to make, then a home equity loan or line of credit may still be the best option for that type of purchase. Plus, with a home equity line of credit, borrowers can draw on the line as needed, which can be an advantage for certain projects, like a kitchen or bathroom remodel, whose costs can change as the project progresses.
If you have a home equity loan or line or are considering one, having a conversation with your tax adviser about your particular situation is always a good idea.
First South financial stands ready to help you with your borrowing needs, whatever they may be. Please feel free to contact us at 901.380.7400, stop by any one of our banking centers, or visit our web site at firstsouth.com for more information. |
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It's that time of year again!If you need to open an Individual Retirement Account (IRA) we offer Traditional IRAs, Roth IRAs, and Coverdell IRAs.
So stop by any banking center or give us a call at 901-380-7400 and we'll be happy to help you!
CURRENT IRA HOLDERS: Remember that contributions made from 1/1/18 to 4/17/18 have the option to be counted for tax year 2017 or tax year 2018!
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Meet our SVP of Mortgage Lending, Penny HensleyAre you thinking about buying a home? Refinancing your existing home? Before you do, you should talk to Penny and her staff and let them put their mortgage lending expertise to work for you. Their member-first attitude will ensure that you will get the mortgage loan that suits your needs best. You can reach our Mortgage Department at 901-380-7530 or at mortgages@firstsouth.com.
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Get pre-approved with us and
get $200 cash back*!
Know how much vehicle you can afford before you go shopping! And when your loan closes we'll give you $200 cash back! To find out more, visit us online or call us at 901-380-7401 today!
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Get pre-approved with us and
get $300 cash back*! Finding a new home can be stressful. Financing it shouldn't be - get pre-approved and receive $300 cash back when it closes! To find out more, visit us online or call us at 901-380-7530 today!
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Visit their showroom at 4651 S. Houston Levee Road to tour and test drive the full lineup of new Mercedes Benz vehicles or their large and diverse inventory of pre-owned vehicles today! Or give them a call at 901-316-3535.
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Christy Heckler, CRPC® Financial Advisor
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Work With Someone
You Trust
Contact us today for a no-cost,
no-obligation appointment.
401(k)/Pension Rollovers Retirement planning Education Funding Mutual Funds Life Insurance Long-Term Care Insurance Wealth Management
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FR-1973139.1-1217-0120
Securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. †CRPC® is a registered service mark of the College for Financial Planning®
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Phishing. Email Scams. Identify Theft.If you have questions, we have a resources page on our web site that will help you get the answers you need to keep you safe when you're online.
This page has information from reliable sources on a variety of topics, plus links on resources that can help you avoid becoming a victim of online fraud. It's just one more way we're here to help you.
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Annual Meeting and Board Election Schedule Please click here to view our annual meeting and board election schedule.
The tentative date for the Annual Meeting is Tuesday, March 13, 2018 at 5 p.m. at the Bartlett Office.
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Notice to Visa Debit Card Holders
Your VISA debit card allows you to conduct transactions on networks which will generally require you to enter your PIN (Personal Identification Number). Some merchants are authorized to accept non-Visa debit transactions without requiring you to enter your PIN. If you choose to sign to authorize a debit transaction, the transaction will be routed as a Visa transaction. Provisions of the cardholder agreement that specifically relate to Visa transactions are not applicable to non-Visa debit transactions.
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*Offers valid until 02-28-18 and does not apply to existing First South Financial loans or loan applications and cannot be combined with other offers. Application must be started with First South Financial. $200 or $300 cash back will be deposited into your account within 3 to 4 business days after the loan closes. Loans are subject to approval criteria, not all applicants will qualify. Offers are subject to change or withdrawal without notice, please see us for complete details. Equal opportunity and equal housing lender.
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The information contained in this email (the “Content”) is provided for informational and educational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The Content is not intended to be and does not constitute financial, investment, tax or accounting advice or a solicitation to buy or sell securities. The Content is necessarily general in nature and is not specific to you or anyone else. YOU SHOULD CONSULT YOUR OWN INVESTMENT, TAX OR ACCOUNTING ADVISORS BEFORE IMPLEMENTING ANY ADVICE INCLUDED IN THE CONTENT. By viewing or utilizing the Content, you agree that you will not hold Marquis Software Solutions, Inc., First South Financial or their affiliates or agents responsible for loss or damages resulting from the Content.
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