Home Equity Loan Interest Deduction — Tax Deduction Guide 2026
Deduct interest on home equity loans or HELOCs if the funds are used to buy, build, or substantially improve your home.
Eligibility
Homeowners with home equity loans used for home improvements
Tax Savings Calculator
Estimated Tax Savings
$1,100
At the 22% tax bracket, a $5,000 deduction saves you $1,100 in taxes.
Savings by Tax Bracket
Requirements
- 1Loan must be used to buy, build, or improve home
- 2Combined with mortgage under $750K limit
- 3Must itemize deductions
Common Mistakes to Avoid
- !Deducting interest on equity loans used for non-home expenses
- !Exceeding combined mortgage debt limit
Required Tax Forms
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Frequently Asked Questions
What is the Home Equity Loan Interest Deduction?
Deduct interest on home equity loans or HELOCs if the funds are used to buy, build, or substantially improve your home.
Who is eligible for the Home Equity Loan Interest Deduction?
Homeowners with home equity loans used for home improvements
How much can I save with the Home Equity Loan Interest Deduction?
The average tax savings is $1,800 per year. The maximum deduction is $750,000. Your actual savings depend on your tax bracket and qualifying amount.
What forms do I need for the Home Equity Loan Interest Deduction?
You'll need to file Schedule A and Form 1098 to claim this deduction.
What are common mistakes with the Home Equity Loan Interest Deduction?
Common mistakes include: Deducting interest on equity loans used for non-home expenses; Exceeding combined mortgage debt limit. Always double-check requirements before filing.
Is the Home Equity Loan Interest Deduction worth claiming?
With average savings of $1,800, the home equity loan interest deduction is worthwhile for most eligible taxpayers. Make sure you meet all eligibility requirements.