Can I deduct the funds I received from a HELOC to purchase another house. The Heloc was used as a bridge loan to purchase another house until the first house sales.

also for the interest to be deductible, it must be the security for the debt. 

Thank you for your response. Im still not quite sure I understand. 

• My original post should have said "Can I deduct the interest....". But, what I'm confused on is if interest can be deducted if the HELOC funds were used to purchase the second home, which was going to become my permanent home. I used the equity in first home ($400,000) to purchase the house I moved to the next month. I am paying interest on those funds until my first house sells (it is on the market). With all that being said, the IRS law on this is confusing. Thank you for any feedback! 

What if it was a second home, but only until my 1st home sells (then it will be my primary home. I have already moved to the other house)? At that time I will pay the HELOC ($400,000) off with the proceeds from the sale of mt 1st home?

I guess what  I'm trying to say is that the HELOC was secured by my "primary" home at the time, but I've moved to the  house I used the HELOC funds to purchase and have my "primary" home listed to sell (currency under contract). We paid several thousand dollars in interest in 2025 and will pay some in 2026 until closing. 

Thank you! 

While some people disagree with this interpretation, most tax professionals interpret the law as saying the loan need to be secured by THAT residence that was purchased or improved. 

In other words, no, you can't deduct the interest because the HELOC on the first house was not used for purchase or improve that first house.  

@kwlamm1961 

You added details, I hope I followed and end up the same place you did.  

To be deductible, the mortgage must be secured by the property that it is used to buy or improve.  Also, the mortgage must be taken out within 90 days before or after buying or improving the home.  That means that:

The interest on the HELOC for house #1 is not deductible, because it was not used to build or improve house #1.

Any mortgage you later take out on house #2 will not be deductible unless you take that loan out within 90 days of closing on house #2.  If it is more than 90 days, then any mortgage on house #2 will only be deductible to the extent that it pays for improvements to house #2.

See https://www.irs.gov/publications/p936#en_US_2025_publink1000229995

Hello,

This is where I am getting conflicting answers.

The funds were used to purchase another home which I have now moved to. My 2st home, which secured the loan, is currently under contract. So, theoretically, it's not a "second" Home since I'm selling the first home.  Thank you!