If you are referring to a Home Equity Line of Credit that you used to pay off personal debt you may not be able to deduct the entire amount of interest. You will only be able to deduct the interest for the portion of your line of credit that you used to buy, build, or substantially improve the home that you used to secure the line of credit.
The same is true if you refinanced your home and used the proceeds for personal debt. You can only deduct the interest on the portion of the loan or line of credit you used to buy, build, or substantially improve the home that is used to secure the loan or line of credit.
You must meet the following conditions to deduct interest on a home equity line of credit:
- The line of credit must be secured by your home.
- Your home that is securing the loan must have sleeping, cooking, and toilet facilities.
- You or someone who is on your tax return must have signed or co-signed the home equity line of credit.
You can figure out how much interest you can deduct and learn more about the rules summarized above, see IRS Publication 936: Home Mortgage Interest Deduction.
Click here for additional information on the Mortgage Interest Deduction
Click here for additional information on mortgage interest.
Click here for additional information regarding deducting interest on a Home Equity Line of Credit.
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