How to Make your New Car Tax Deductible using a Home Equity Loan

Step-by-Step Guide

1. 1

   Step 1: Visit auto dealerships.

   Ask about the rates the dealer is offering for the car you want to purchase.
   
   It will be helpful to have this information when you contact your bank to research their home equity loan rates.
2. 2

   Step 2: Contact your financial institution

   , Apply for the loan that has the most favorable rates. ,, In January of each year, financial institutions are required to notify the government of how much interest you paid on your mortgage and other mortgage-related loans.
   
   They are also required to send you a copy of this form, known as Form
   1098.
   
   Once you receive Form 1098, you will be able to record the amount of interest.
3. 3

   Step 3: and others

4. 4

   Step 4: and ask for their current home equity loan interest rate.

5. 5

   Step 5: Compare this rate with the rate that the auto dealership is offering on new vehicle financing.

6. 6

   Step 6: Pay the full purchase amount of your new car up front to the dealer once you have been approved for the home equity loan and given the funds.

7. 7

   Step 7: Record the amount of home equity loan interest that you paid for the calendar year on Schedule A of Form 1040.

Detailed Guide

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