Homeowners have long used home equity to fund large purchases, consolidate debt, or cover unexpected expenses. Up until 2018, many could tap into this resource, deducting the interest on up to $100,000 of home equity debt from their taxes—even if the money wasn’t used for home improvements. However, a significant change in tax law has altered this long-standing strategy.
From 2018 through 2025, the tax code restricts the interest deduction on home equity loans. Now, you can only deduct the interest if you use the funds to buy, construct, or substantially improve your home. If you plan to use your home equity for purposes like purchasing a new car, consolidating debt, or financing a vacation, you will no longer benefit from this deduction. This rule applies to all home equity debt, regardless of when it was incurred.
At Gleason Tax Advisory, we understand that these changes can have a profound impact on your financial planning. We are ready to help you navigate this new landscape and reassess your tax strategies. Whether you are considering a home equity loan or need advice on how to maximize your deductions under the new law, we offer personalized guidance to help you make informed decisions.
Now is the time to review your financial plans. Adjusting your strategy in light of these changes can help you avoid unexpected tax burdens.
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