One of the best aspects of a home equity line of credit (HELOC), is that the interest is often tax deductible. Because a HELOC is technically considered a home loan, most state and federal governments allow borrowers to deduct a significant portion of the interest they pay.

Townhall.com classifies HELOCs as a type of “good debt,” because of the HELOC tax deduction and the tendency towards lower rates:

“Good debt means inexpensive debt, and inexpensive debt is typically backed by collateral: A home or a second home, for example, along with a home equity line of credit (HELOC). The fact that most interest payments for home-related loans are tax-deductible only adds to their attractiveness. You can deduct the interest on a home or second home loan as large as $1 million (combined). For a second mortgage or HELOC, you can deduct interest up to $100,000.”

Before taking out a HELOC, be sure to talk to your accountant about your personal financial situation and your eligibility for HELOC tax deductions.

See Also: How a HELOC Works

Tags | Heloc, home equity line of credit, tax deduction