Re: "How much of your loan did you use to build, remodel, or repair the property it's secured by?" I assume this means only expenses/improvements/repairs in 2022?

Forum|Forum|3 years ago
April 13, 2023
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DavidD66

Not necessarily. If you took out the loan to remodel your house in December 2022, and haven't yet done all the renovations, but intend to use 100% for renovations, then enter the full amount of the loan. If you took a loan for renovations and to pay off credit cards, excluded the amount that was, or will be used to pay off credit cards.

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joeyT44Author

Thanks for your reply, but that's not quite what I was asking. Let me see if I can be clearer: Can we only deduct the amount from our HELOC that was spent in TY 2022?

For example, in 2021, we installed a new lawn and new irrigation system, which we did not deduct on last year's taxes, as well as all new Andersen windows on the first floor of our house, which we finished paying off in 2022.

As a result, we are also still paying off our HELOC balance for these home improvement expenditures, so I don't know if this is also what makes these deductions relevant now.

DawnC

Employee

You can only deduct the interest on the HELOC if the loan proceeds were used to buy, build, remodel, or substantially improve the home. Don't include any amount of principal that you have not or will not use to improve the home. If you borrowed 100K and only used 50K to improve the home, you can only deduct interest on 50K. If you are in the process of making improvements, include those amounts, but any interest on the principal not used to improve the home has to be excluded.

If you’ve ever used part of this loan to pay for things other than this home, you cannot deduct the interest from that amount of the loan, even if the transaction didn’t take place this year. See HELOC Mortgage.

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