Is Home Equity Loan Interest Tax Deductible? (Simply Put)

What about money borrowed after 2025?

If you are planning ahead for tax year 2026 and beyond, for home equity loans or lines of credit secured by your main home or second home, the interest you pay may be deductible regardless of how you use the money.

For example, if you use a home equity loan or a line of credit to pay off credit card debts, you may be able to deduct the interest paid on those borrowed funds. They will still be subject to certain dollar limitations in 2026, but the IRS will return to more flexible qualification guidelines that existed before 2018.

How to claim a home equity loan interest tax deduction

If you use a professional tax service or online tax software like IRS Free File, TurboTax, TaxSlayer, or H&R Block, the tax preparer or program will ask if you paid any interest on a primary mortgage, home equity loan, or HELOC. Follow the instructions provided to determine if you will take the standard deduction or itemize your deductions — and what those itemized deductions should be.

If you handle your own taxes, you will fill in the qualified interest amount paid on IRS Schedule A (Form 1040). Your home equity loan or HELOC lender should send you a Form 1098 that indicates how much you spent on interest during the tax year.

Whether you are using tax software, a pro service, or manually filing, it’s important to compare the loan provider’s Form 1098 with your records to make sure it’s correct. If necessary, request an amended 1098 before you proceed.

While we’re keeping our information simple, for those who want to see the government lingo, here’s how the IRS explains it in Publication 936:

“Generally, you can deduct the home mortgage interest and points reported to you on Form 1098 on Schedule A (Form 1040), line 8a. However, any interest showing in box 1 of Form 1098 from a home equity loan, or a line of credit or credit card loan secured by the property, is not deductible if the proceeds were not used to buy, build, or substantially improve a qualified home. If you paid more deductible interest to the financial institution than the amount shown on Form 1098, show the portion of the deductible interest that was omitted from Form 1098 on line 8b. Attach a statement to your paper return explaining the difference and print ‘See attached’ next to line 8b.”

Whew, that’s a lot! This is why we led this section by explaining that your tax service or online tax software will guide you on how to report and claim your home mortgage Interest deductions. You have enough forms, lines, schedules, and boxes in your life. Take advantage of tax professionals or software innovations that make it easier.

Know your home’s value and deduct what’s allowed

That’s it — our simple guide to answering the question, “Is home equity loan interest tax deductible?” We hope this post has been helpful. We should point out that this article is for educational purposes and is not intended to be construed as financial or tax advice. HomeLight always encourages our readers to reach out to experienced advisors.

If you need advice from a top-rated real estate professional, HomeLight partners with more than 30,000 of the highest-performing real estate agents in the country. Our free Agent Match platform analyzes over 27 million transactions and thousands of reviews to determine which agent is best for you based on your needs.

So whether you are buying or selling or just looking to consult with a seasoned expert about what renovations or upgrades will add the most value to your home, we’ll be happy to connect you with a top agent in your market today.

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