"Ramsey quickly corrected the misconception. " There's no tax write-off for a HELOC unless you use it to improve the home," he said. The Tax Cuts and Jobs Act of 2017 removed deductions for home equity borrowing that is not tied to substantial home improvements. Using a HELOC for daily spending, investments, or consolidating debt provides no tax benefit at all."
"That means the caller's advisor either misunderstood current tax law or chose to prioritize loan activity over responsible guidance. Ramsey urged the caller to pay off the HELOC immediately and rethink their relationship with that advisor. The couple now faces interest charges on a $50,000 balance they took on for a tax benefit that does not exist. What they believed was smart, tax-advantaged borrowing turned into regular consumer debt secured by their home."
Many Americans let tax misconceptions influence borrowing decisions, believing mortgage-related debt always yields tax savings. A couple opened a $50,000 HELOC after receiving advice that it would be tax-deductible and now carry the balance. The Tax Cuts and Jobs Act of 2017 eliminated deductions for home equity borrowing unless funds are used for substantial home improvements. HELOCs used for daily spending, investments, or debt consolidation offer no tax benefit. The couple faces interest charges on $50,000 and should pay it off rather than rely on outdated advice. Even hypothetical deductions often do not offset interest costs, producing net losses.
Read at 24/7 Wall St.
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