Is Equity In A Home Taxable Income?
Posted by @TopMortgageRate
Money withdrawn from a home equity line of credit, or HELOC, is not considered income to you and is not taxable. However, if the debt is not repaid as required, then it may be taxable to you if the debt is canceled or forgiven by the bank.
A HELOC is a type of mortgage taken on your home whereby the lending institution lets you borrow up to a certain limit against the equity you have in your home. You take out money from the line of credit as you need the money and you can use the proceeds for whatever you want --from home improvements to education expenses. The interest rate is variable and is usually tied to an index, such as the prime rate. Additionally, the interest may be tax deductible as an itemized deduction on Schedule A, subject to limitations.
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