Can I claim 100% HELOC interest deduction for home improvements?

I recently took out a Home Equity Line of Credit (HELOC) on my primary residence about 3 months ago. I've been using all the withdrawals exclusively for home renovations - we redid the kitchen, updated the bathrooms, and fixed some structural issues in the basement. I still have my original mortgage on the house as well. I always itemize my deductions when filing taxes. From what I understand, since I used the HELOC money solely for home improvements, I should be able to deduct 100% of the interest paid on it. Is that correct? Also, will my lender send me a 1098 form for the HELOC interest? Since I only got the HELOC in late summer, I'm thinking the interest might be less than $600 for this year. Does that affect whether they'll send a form or whether I can claim the deduction?

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21 comments

Mateo Rodriguez

•8M

Yes, you're on the right track! Since you used your HELOC funds exclusively for home improvements on your primary residence, you can indeed deduct 100% of the interest paid on it. The Tax Cuts and Jobs Act limited HELOC interest deductions, but specifically kept the deduction when the funds are used to "buy, build or substantially improve" the home securing the loan. As for the 1098 form, your lender is only required to issue one if you paid $600 or more in interest during the year. However, most lenders will send one anyway regardless of the amount. If they don't, you can still claim the deduction - you'll just need to keep good records of the interest you paid. Check your year-end statement or online account for the interest amount. Make sure you keep documentation showing that the HELOC funds were used for home improvements (receipts, contractor invoices, etc.) in case of an audit. The IRS may want proof that the money was used for qualifying purposes.

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Mateo Rodriguez

•8M

There is indeed a limit. The Tax Cuts and Jobs Act restricts the interest deduction to loans totaling $750,000 or less for new mortgages (taken out after December 15, 2017). This limit applies to the combined total of your primary mortgage and your HELOC. If you had older loans (before December 16, 2017), the limit is $1 million. For your second question, both loans are treated similarly for tax purposes as long as they're both secured by your primary residence and used for qualifying purposes. You'll need to keep track of the interest for both loans, but they both fall under the same combined limit. Just make sure you're itemizing deductions, as you mentioned you already do, since the standard deduction has increased significantly in recent years.

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Ethan Wilson

•8M

I went through almost this exact situation last year and was struggling to figure out if my HELOC interest was deductible. I found this tool called taxr.ai (https://taxr.ai) that really helped clear things up. You basically upload your documents and it gives you personalized guidance on your specific situation. For my HELOC, it confirmed I could deduct the interest since I used it for home improvements, and it even explained exactly how to report it on Schedule A. It also flagged that I needed to keep my renovation receipts to prove the money went to home improvements. The tool even has experts you can chat with if your situation is complicated.

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Ethan Wilson

•8M

For TurboTax, I found taxr.ai gave me more personalized explanations about why certain deductions applied in my specific situation. TurboTax would let me input the HELOC interest, but taxr.ai actually explained the IRS rules behind it and highlighted documentation I needed to keep. It was like having the "why" behind each deduction. Regarding security, they use bank-level encryption for all document uploads and don't store your sensitive info after analysis. I was concerned about that too, but they explain their security measures pretty clearly on their site. They also don't ask for things like SSNs or full account numbers - just the tax documents themselves for analysis.

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Yuki Tanaka

•8M

Just wanted to update after trying taxr.ai that was mentioned earlier. It actually saved me a bunch of money on my HELOC interest deduction! I wasn't sure if I could deduct the interest since I used part of my HELOC for home improvements and part for consolidating credit card debt. The tool analyzed my loan documents and explained that I could deduct the proportional amount used for home improvements, which my regular tax software didn't make clear. It even helped me calculate exactly what percentage was deductible based on my usage. Definitely helped me avoid leaving money on the table!

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Carmen Diaz

•8M

If you're having trouble getting answers about your HELOC deduction directly from the IRS (I know I was), I highly recommend using Claimyr (https://claimyr.com). It's this service that actually gets you through to a real IRS agent quickly instead of waiting on hold for hours. They have a demo video here: https://youtu.be/_kiP6q8DX5c I had a similar HELOC situation with some complicated home improvement expenses, and I wasn't sure if certain renovation expenses qualified. I used Claimyr to reach an IRS representative who confirmed exactly which expenses qualified for the interest deduction. Saved me hours of stress and uncertainty.

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Carmen Diaz

•8M

The service basically keeps dialing for you and navigates the phone tree automatically. When they reach a live agent, they call you and connect you directly to that agent. They use technology to handle the tedious waiting part, so you don't have to sit there listening to hold music for hours. No, it's definitely not a scam. I was skeptical too, but it actually works. They don't claim to "jump the queue" - they just handle the waiting process for you. It's like having someone else wait in a physical line while you do other things. When they reach the front, they call you over. It saved me about 2 hours of hold time when I needed clarification about my HELOC interest deduction.

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Emily Jackson

•8M

I want to publicly eat my words about Claimyr. After posting my skeptical comment, I decided to try it myself since I've been struggling to get through to the IRS about a similar HELOC question. To my shock, I got connected to an IRS agent in about 45 minutes (without having to actually be on hold myself). The agent walked me through exactly how to document my HELOC interest deduction since I used it for both home improvements and some other expenses. Turns out I can deduct a portion of the interest proportional to the home improvement use. I've been trying to get this answer for weeks! Definitely worth it if you need specific clarification from the IRS directly.

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Liam Mendez

•8M

According to my tax advisor, "substantial improvements" generally means projects that add value to your home, prolong its useful life, or adapt it to new uses. Major renovations like kitchen remodels, bathroom upgrades, room additions, new roofs, and finishing a basement typically qualify. Routine maintenance like painting or minor repairs usually don't count as "substantial improvements" on their own. However, if painting is part of a larger renovation project, then it would be included in the qualifying costs. The key is whether the work increases your home's value or extends its life, not just maintaining what's already there.

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Aaliyah Jackson

•4M

The $750k limit is per tax return, not per person or per property. So if you and your spouse file jointly (which most married couples do), you get one combined limit of $750,000 for all qualifying mortgage debt on your primary residence. If you file separately, each spouse gets their own $750k limit, but it only applies to the debt they're legally responsible for. Since you own the home jointly, the limit would typically apply to your combined mortgage debt regardless of whose name the loans are in. Just make sure you're both on the same page about how you're reporting the interest deduction if you have multiple loans.

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Malik Jackson

•2M

Just wanted to add my experience for anyone else in a similar situation. I took out a HELOC last year specifically for home improvements and was able to deduct 100% of the interest since I used every penny for qualifying renovations (new HVAC system, flooring, and electrical upgrades). One thing I wish I'd known earlier - make sure you have a clear paper trail from the HELOC draws to the home improvement expenses. I kept a spreadsheet tracking each draw amount, date, and what specific project it funded, along with all contractor invoices and receipts. This made tax filing much smoother and gives me confidence if the IRS ever questions the deduction. Also, even though my lender didn't send a 1098 (interest was only about $400 for the year), I was still able to claim the full deduction using my year-end loan statement. The key is just having proper documentation of both the interest paid and how the funds were used.

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