Home equity line of credit (HELOC) is indebtedness defined as indebtedness other than acquisition indebtedness secured by a qualified residence. Meaning is does not include the original primary mortgage on your principal residence.
According to the new tax law for the tax years within the TCJA period, a taxpayer may treat no more than $750,000 as acquisition indebtedness ($375,000 for MFS taxpayers).
For acquisition indebtedness incurred before December 15, 2017, the limit is $1 million ($500,000 for MFS taxpayers). If a taxpayer entered into a written binding contract before December 15, 2017, to close on the purchase of a principal residence before January 1, 2018, and purchased the residence before April 1, 2018, the $1 million limit ($500,000 for MFS taxpayers) applies.
In addition, refinanced indebtedness is treated as incurred on the date that the original indebtedness was incurred to the extent that the amount of the debt resulting from the refinancing does not exceed the amount of the refinanced indebtedness.
Therefore, acquisition debt incurred prior to December 15, 2017, retains its status, even if the debt is refinanced. The maximum dollar amount that can be treated as principal residence acquisition indebtedness does not decrease because of refinancing.