Dave Ramsey: ‘There’s No Such Thing as a Tax Write-Off on a HELOC’

The myth that home equity loans create valuable tax deductions has persisted long after the 2017 Tax Cuts and Jobs Act changed the rules. Many homeowners still believe borrowing against their home provides automatic tax benefits, a misconception that financial advisors sometimes perpetuate.

On a November 21 episode of The Dave Ramsey Show, a caller revealed their financial advisor recommended taking out a $50,000 home equity line of credit for the tax write-off. The couple followed this advice but now questioned whether it made sense.

Ramsey dismantled the recommendation immediately. “There’s no such thing as a tax write-off on a HELOC unless you use it to improve the home,” he explained. The caller confirmed they used the money for other purposes, meaning zero tax benefit existed.

The couple now carried $50,000 in what amounted to consumer debt secured by their home, based on outdated or incorrect advice.

“You got bad advice,” Ramsey said. “You need to pay this off as fast as possible.”

The tax deduction for home equity interest only applies when funds directly improve the property securing the loan. Using a HELOC for vacations, cars, or general expenses provides no tax advantage while putting your home at risk. This couple learned an expensive lesson about verifying financial advice, even when it comes from a supposed professional.

Advice Worth Questioning

This story exposes a dangerous gap in financial advisor accountability. The 2017 tax law changes eliminated most HELOC interest deductions, yet advisors continue recommending these products as tax strategies. A HELOC used for anything except home improvements is simply consumer debt with your house as collateral. The couple essentially converted unsecured spending into secured debt that could cost them their home if they default. No tax deduction exists to offset this risk. The lesson extends beyond HELOCs: any financial product sold primarily for tax benefits deserves scrutiny. Tax tail shouldn’t wag the financial dog. If the underlying transaction doesn’t make sense without tax considerations, the tax angle probably won’t save it. Always verify tax claims independently, preferably with a CPA rather than someone earning commissions on the products they recommend.