I Was Told to Take Out a HELOC for Tax Write-Offs, but Now I’m Questioning It

The promise of tax deductions can make expensive financial moves seem attractive, but the rules matter. When advisors push products based on outdated or incorrect tax information, clients end up with debt and no actual benefit.

On a November 21 episode of The Dave Ramsey Show, a caller and his wife had been advised by their financial advisor to take out a home equity line of credit for tax write-off purposes. They were questioning whether this strategy made sense.

Ramsey immediately addressed the fundamental problem with the advice.

“There is no tax write-off for a HELOC on a personal residence,”

The Tax Cuts and Jobs Act of 2017 eliminated the mortgage interest deduction for home equity loans unless the borrowed money is used specifically to buy, build, or substantially improve the home securing the loan. Simply taking out a HELOC for other purposes provides no tax advantage.

The caller’s advisor appeared to be operating on pre-2018 tax law or simply pushing a product without understanding current regulations. “Your financial advisor is an idiot,” Ramsey said. He recommended the couple find a new advisor who understands basic tax law and doesn’t suggest taking on debt for nonexistent benefits.

Product Sales Masquerading as Advice

This story exposes a troubling industry practice: advisors recommending debt products based on phantom tax benefits. The HELOC interest deduction hasn’t applied to personal use borrowing since 2017, yet advisors continue pitching it. The fundamental problem is that even when the deduction existed, it rarely made mathematical sense. Paying $10,000 in interest to save $2,500 in taxes still costs $7,500. Real financial advice focuses on building wealth through asset accumulation, not on creative ways to deduct the cost of borrowing. Commission-driven product recommendations dressed up as tax strategy hurt clients who trust professional credentials. This couple needs an advisor whose compensation aligns with their interests, not one who profits from putting them into unnecessary debt.