is HELOC loan tax deductible?

Hello RWRDfamily,

Thank you for participating in this Ask the Experts event. As to your question, the only thing that could be deductible from your HELOC would be the interest you pay on that loan, not the whole loan itself. Because you used the HELOC to purchase the rental property, the interest expense would be an expense for the rental property itself, not for you personally if you itemize your deductions.

I hope that helps.

Hi there!  This is an excellent question.  Congratulations on purchasing a new property! The passive income will be a fantastic opportunity for you and your family. A HELOC is often a great way to finance such a purchase, as the interest rates can be significantly lower than other options. 

The good news, is that as a HELOC is a loan, it is not considered income and therefore not taxable.  However, I know there is a lot of interest to pay, and everyone is always looking for a way to use that interest as a tax deduction.   Generally, if a HEL or HELOC is secured by your main home or second home, you (or your spouse filing jointly signed it), and the mortgage debt is $750,000 or less, then the interest may qualify as a deduction.  However, in this case it sounds like you used the funds to purchase a separate property, not to build or improve the main home which secures the loan.  So you would not be able to deduct the interest on this loan.  

If you take an additional HELOC on this property to make improvements to this property, that would be deductible.  Or if you decide in the future to take a HEL or HELOC on the new property once you have acquired some equity, to do substantial improvements on that property, that would also be deductible. 

Here is a link which may be helpful.  https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-credits-deductions/deduct-interest-home-equity-loan-heloc/L7FtbqiK2_US_en_US?uid=l8ly2w49