Is HELOC interest tax deductible?

Sometimes. It depends on what you spend the money on.

Reviewed by Shawn Way, NMLS #1007298★ 4.9 from 111 reviewsUpdated October 28, 2026

What qualifies

• Additions, remodels, a new roof, HVAC, solar, an ADU on the same property
• Not routine repairs or maintenance that don't add value or extend the home's life
• Not paying off cards, cars, student loans or medical bills

Mixed use

If you use part for a kitchen and part for cards, only the interest on the kitchen portion can qualify. Keep draws for improvements separate and documented.

Records to keep

Contracts, invoices, permits and proof of payment from the HELOC for each improvement. This page isn't tax advice; confirm with your tax preparer.

Example

You draw $60,000: $45,000 for a kitchen and $15,000 to pay off a card. At 7.75% APR, first-year interest on the full balance is about $4,650. Only the share tied to the kitchen, about $3,488, could be deductible, and only if your itemized deductions beat the standard deduction.

A worked example

You draw $80,000: $50,000 for a kitchen remodel and $30,000 to pay off credit cards. Interest for the year is $6,200. Because 62.5% of the money went to the kitchen, about $3,875 of the interest may be deductible if you itemize; the $2,325 tied to the cards isn't. Keep a ledger tying each draw to its use.

Do you need to itemize to deduct HELOC interest?

Yes. The HELOC interest deduction only helps if your itemized total (mortgage interest, state and local taxes, charitable gifts and so on) exceeds the standard deduction, which is above $30,000 for married couples. The 2025 tax law raised the SALT deduction cap from $10,000 to $40,000 (about $40,400 for 2026), so more homeowners in high-tax states now itemize. Run it both ways or ask your tax preparer.

The debt limit

Interest is deductible only on up to $750,000 of qualifying mortgage debt in total ($375,000 if married filing separately), counting your first mortgage and the HELOC together. Mortgages taken out before December 16, 2017 may be grandfathered at $1 million.

How it's reported

The lender sends Form 1098 showing the interest you paid. It doesn't separate deductible and nondeductible uses; you do that with your records. Keep invoices, contracts and the draw history for at least as long as you keep the tax return.

State taxes

Most states that have an income tax follow similar rules for mortgage interest, but some differ. California, for example, didn't adopt every federal change. Check with a tax preparer in your state.

This is general information, not tax advice.

Common mistakes

• Deducting interest on money used for debt consolidation or a car.
• Not keeping records that tie draws to improvements.
• Counting repairs alone as improvements.
• Forgetting the $750,000 total limit on qualifying mortgage debt.
• Itemizing when the standard deduction would be larger.

Example: when the deduction is worth nothing

A married couple pays $9,000 a year in mortgage and HELOC interest and $10,000 in state and local taxes, and gives $2,000 to charity: $21,000 in itemized deductions. Their standard deduction is higher, so they take the standard deduction and get no benefit from the HELOC interest at all. Many homeowners are in this position; don't choose a HELOC over another option based on a deduction you won't use.

Related question: What can you use a HELOC for?

Also asked

Does my state follow the federal HELOC interest rules?

Most states with an income tax follow similar rules for mortgage interest, but some differ; California, for example, didn't adopt every federal change. Check with a tax preparer in your state.

More in HELOC guides

• Credit score for a HELOC
• HELOC closing costs and fees
• How long a HELOC takes
• Does a HELOC require an appraisal?
• Fixed-rate HELOC options
• Can you pay off a HELOC early?
• How to refinance a HELOC
• What's the smallest and largest HELOC you can get?

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