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Returning Member
posted Feb 28, 2022 6:58:22 PM

Is interest on a HELOC deductible if the proceeds were used to purchase an interest in my house?

My house was purchased in joint tenancy a couple of years ago, so basically my house was owned 50% by me and 50% by another individual.  Last year I took out a HELOC and used the proceeds to purchase the 50% owned by the other individual.  The other individual signed a quit-claim and now I own 100% of my house.  Since the HELOC proceeds were used for something related to my house (purchase of another person's share), can I deduct the interest I'm paying on the HELOC? 

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1 Replies
Expert Alumni
Feb 28, 2022 7:09:15 PM

Yes, the interest on your HELOC would be deductible if you used it 100% to purchase the rest of the equity in your home. If you used a portion of it for anything else, only the interest on the portion you used to buy out the other person would be tax deductible.