Home Equity Loans: Risks and Tax Deduction Rules
By IRS Mortgage Interest Office | 7 min read
Understand home equity loan risks and tax rules. IRS deduction requirements and safer borrowing alternatives.
Home equity loans allow borrowing against home value but carry risks. IRS tax rules: Interest deductible only if used to buy, build, or improve the home, Combined mortgage and home equity debt limit $750,000, Keep detailed records of loan use, Interest not deductible for personal expenses. Risks include foreclosure if unable to repay and reduced home equity. Consider alternatives like personal loans or cash-out refinancing.\n\n**Related Resources**\n- [Financial Planning Tools](/tools)\n- [Budget Calculator](/budget-planner)\n- [Credit Guide](/category/Debt%20%26%20Credit)\n- [Money Saving Tips](/category/Save%20Money)