PROVIDENCE – Less than 5 percent of homeowners with home equity loans knew about the removal of interest deductions as part of the new tax law, a new survey shows.
LendEdu.com, an online marketplace for student loan refinancing, recently surveyed 1,000 homeowners with home equity loans.
The results show home equity loans have become a popular way to increase home values since the Great Recession. But the tax reform signed into law in December could potentially curb the interest, according to the survey.
“Changes to the tax code from the end of 2017 may slow down the home equity loan market,” LendEdu reports.
Interest paid on home equity loans will no longer be deductible in 2018. Prior to the new law, borrowers could deduct interest paid on up to $100,000 of home equity debt. Just 4.4 percent of respondents to the LendEdu survey were aware.
“We found that the vast majority of consumers do not understand the changing tax law,” according to the report. “We also found that over a third of respondents incorrectly believed that the changes to the tax code would be advantageous to home equity borrowers.”
The survey covers several other topics related to the lending area, which can be found on its website here. The report also highlights home loan products of Citizens Bank, which is the largest Rhode Island-based bank.