HELOC interest may be tax deductible — but only under specific conditions established by the Tax Cuts and Jobs Act of 2017. The rules are more nuanced than many homeowners realize, and consulting a tax advisor for your specific situation is strongly recommended.

When HELOC Interest IS Deductible

Under current tax law, interest on a HELOC is deductible when the loan proceeds are used to buy, build, or substantially improve the home that secures the HELOC. For example:

• Using a HELOC to add a room to your primary residence — deductible
• Using a HELOC to remodel your kitchen — deductible
• Using a HELOC to build an ADU on your property — potentially deductible

When HELOC Interest is NOT Deductible

Interest on HELOC funds used for non-home purposes is generally not deductible:

• Debt consolidation (paying off credit cards)
• Tuition or personal expenses
• Business investment unrelated to the property
• Purchasing another property

Loan Limit

The deductibility applies to mortgage debt (combined first mortgage + HELOC) up to $750,000 for loans originated after December 15, 2017 ($1,000,000 for prior loans). Interest on amounts above the limit is not deductible.

Important Disclaimer

Tax laws are complex and individual circumstances vary significantly. This is general information only — not tax advice. Always consult a qualified CPA or tax advisor before making decisions based on potential tax deductibility.