Finance Maxxing
Borrowing & Leverage
HELOC (Home Equity Line of Credit)
Borrow against home equity; interest deductible if used for home improvement.
HELOCs use your home as collateral to provide a revolving line of credit.
Tax Deductibility After TCJA
| Use of Funds | Deductible? |
|---|---|
| Buy, build, or improve the home | Yes (up to $750K combined debt) |
| Pay off credit cards | No |
| Fund a business | No (as mortgage interest) |
| Pay for college | No |
| Invest in stocks | Possibly (as investment interest) |
Typical Terms
| Feature | Typical Range |
|---|---|
| Interest rate | 6.5%–9.5% (variable, prime + margin) |
| Draw period | 10 years |
| Repayment period | 20 years |
| LTV limit | Up to 80–85% |
| Closing costs | $0–$2,000+ |
Combined Mortgage Limit
The $750,000 limit applies to all mortgage debt combined:
First mortgage balance + HELOC balance ≤ $750,000 for interest deduction
For mortgages originated before Dec 15, 2017, the grandfathered limit is $1,000,000.
Caution: Your home is at risk. Unlike margin loans or box spreads, defaulting on a HELOC can lead to foreclosure.
Sources
Related Terms
More in Borrowing & Leverage
Margin Loan
Borrow against brokerage holdings; interest may be deductible.
§1256 Contracts
60/40 tax treatment — 60% LTCG, 40% STCG regardless of holding period.
Box Spread
Synthetic loan using options at near-Treasury rates.
Investment Interest Expense
Deductible against net investment income; requires itemizing.
Buy-Borrow-Die Strategy
Borrow against appreciated assets to avoid capital gains; basis steps up at death.