Tax Implications of Home Equity

Using home equity—funds borrowed against the value of your home—can have tax implications. If you take out a home equity loan or line of credit and use the money for your primary residence (like home improvements), the interest may be tax-deductible under current law. However, if you use the funds for other purposes, such as covering personal expenses or investments, the interest generally isn't deductible. Additionally, upon selling your home, any remaining equity may be subject to capital gains tax if it exceeds the exemption limit. Always consult a tax professional for personalized advice based on your specific situation.