Is interest on a home equity line of credit deductible as a second mortgage?

It depends. For tax years 2018 through 2025, a deduction is not allowed for home equity indebtedness interest. However, an interest deduction for home equity indebtedness may be available for tax years before 2018 and tax years after 2025. Interest paid on home equity loans and lines of credit in tax years before 2018 and tax years after 2025 is only deductible when you use the proceeds to buy, build or substantially improve your home that secures the loan.

For example, for qualifying years, interest on a home equity loan used to build an addition to an existing home would be deductible, while interest on the same loan used to pay personal living expenses, such as credit card debts, would not be deductible. For qualifying years, the loan must be secured by the taxpayer’s main home or second home (known as a qualified residence), not exceed the cost of the home and meet other requirements.