HELOCs are treated differently.
In the Mortgage interest area of the TurboTax interview, you should make a separate entry for your HELOC (as opposed to your regular loan). Go to Deductions & Credits->Your Home->Mortgage Interest, Refinancing, and Insurance and click on Start or Revisit on the right.
The first thing is that TurboTax will ask you the information that is on the 1098. You must enter the information that is on boxes 1, 2, and 3 on the 1098, because these help TurboTax to determine whether or not the interest on your HELOC is deductible.
Continue, and soon you will come to a screen with the title of "Is this the original loan you took out to purchase this property?" Answer "NO" and you will see some more lines added to the screen, so then answer that it is a HELOC. Then next screen will ask you what you used the HELOC loan proceeds for. Depending on your answers, there may be additional screens.
HELOCs are now wrapped into the total limit on tax-deductibility—with a caveat. Under the new law, home equity loans and lines of credit are no longer tax-deductible. However, the interest on HELOC money used for capital improvements to a home is still tax-deductible, as long as it falls within the home loan debt limit
If you take out a home equity loan, your interest payments may qualify for a deduction in addition to your mortgage interest. Beginning in 2018, only the amount that is used to buy, build, or improve your home qualifies for the interest deduction.
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If you use a HELOC for home improvement, you may still be able to deduct the interest.
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HELOC money used for anything other than improving your residence — such as paying down debt — is no longer tax-deductible, but that doesn't mean that a HELOC isn’t a valuable tool.
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The limit on deductible interest for your mortgage is now $750,000 of indebtedness for tax years 2018 through 2025. However, if your loan originated before December, 15, 2017, you will still be able to deduct the interest on up to $1 million of indebtedness.
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