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However, other requirements must be met to qualify for this tax write-off.
Is HELOC Interest Tax Deductible?
During the draw period, homeowners may withdraw funds and are only required to make interest payments.
The loan must be secured by the main home or second home and meet other requirements.
In most cases, the IRS states that homeowners can deduct all their HELOC interest.
Although, there are some limitations.
Before tax season, you should receiveIRS Form 1098, Mortgage Interest Statement, from your lender.
This shows the interest you paid on your primary mortgage and HELOC.
Calculate the HELOC Interest Deduction
Determine how much of the HELOC interest qualifies for the deduction.
Look at Form 1098 to find the total interest paid during the year.
You paid $2,000 in interest over the year.
To determine your deductible interest, multiply $2,000 by 60% to get $1,200.
Claim the Deduction
Claim the HELOC deduction onSchedule A (Form 1040).
On Line 8a, report the qualifying deductible mortgage interest paid to the lender reported on Form 1098.
The Bottom Line
HELOC interest is tax deductible through 2025 only under certain conditions.
You must also itemize your deductions, and your mortgage and HELOC amounts combined must fall withincertain dollar limits.
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