Dave Ramsey: 'There's No Tax Write-Off for a HELOC' When Used for Everyday Spending

"They followed the advice and now carry the debt, believing they're making a smart tax move. "There's no tax write-off for a HELOC unless you use it to improve the home," Ramsey explained. The 2017 Tax Cuts and Jobs Act eliminated deductions for home equity debt used for anything other than substantial home improvements. Using a HELOC for everyday expenses, investments, or debt consolidation provides zero tax benefit."

"The couple now faces unnecessary interest payments on $50,000 they borrowed under false pretenses, turning what they thought was tax-advantaged debt into expensive consumer borrowing secured by their home. When Advice Costs You This story exposes a dangerous reality: financial advisors don't always have your best interests at heart, and outdated tax knowledge can be expensive. Even if this HELOC qualified for a deduction (which it doesn't), the math rarely works. Paying $3,000 in interest to save $750 in taxes isn't strategy, it's loss."

Many Americans make borrowing decisions based on misunderstood mortgage interest deductions. The 2017 Tax Cuts and Jobs Act eliminated deductions for home equity debt unless proceeds are used for substantial home improvements. A homeowner took a $50,000 HELOC after an advisor recommended it for a tax write-off and now carries high-interest debt. HELOC funds used for everyday expenses, investments, or debt consolidation provide no tax benefit. The borrower now pays 8–10% interest while the original deduction no longer applies. Paying large interest to save a small tax amount is typically a net loss. Advisors may prioritize loan business over sound guidance.

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