Do You Get a 1098 for a HELOC and Can You Deduct It?

Yes, your lender will send you a Form 1098 for a HELOC if you paid at least $600 in interest during the year, because a HELOC is secured by real property and falls under the same mortgage interest reporting rules as a first mortgage.¹ Receiving the form is not the same as being allowed to deduct the interest, though, and that is where most homeowners get tripped up.

When Your Lender Sends a 1098 for a HELOC

Any lender that collects $600 or more in mortgage interest from an individual in a calendar year has to file Form 1098 with the IRS and send you a copy by January 31. The IRS defines “mortgage” broadly here: any obligation secured by real property counts, and the Form 1098 instructions specifically call out interest on a line of credit secured by real property as reportable.² Because your HELOC gives the lender a lien on your home, it qualifies.

The $600 threshold is applied separately to each loan. If you have a first mortgage and a HELOC with the same bank, the bank looks at each one on its own. It is normal to get a 1098 for the primary mortgage and nothing for the HELOC in a year when the HELOC interest came in low.

When HELOC Interest Is Actually Deductible

The 1098 reports what you paid. It does not tell the IRS, or you, whether the interest is deductible. HELOC interest is deductible only if you used the borrowed money to buy, build, or substantially improve the home that secures the loan. The IRS puts it plainly: “you can no longer deduct the interest from a loan secured by your home to the extent the loan proceeds weren’t used to buy, build, or substantially improve your home.”³ The rule sits in 26 U.S.C. § 163(h)(3)(F).⁴

Qualifying uses include a major kitchen renovation, a new roof, an addition, a finished basement, or any other capital improvement to the home securing the HELOC. Non-qualifying uses include paying off credit cards, tuition, a car, a vacation, or investments. If the money went anywhere other than into the home itself, the interest is not deductible no matter what the 1098 says.

Before 2018, you could deduct interest on up to $100,000 of home equity debt regardless of how you spent it. The Tax Cuts and Jobs Act suspended that rule, and the One Big Beautiful Bill Act extended the restriction past 2025, so the “buy, build, or substantially improve” test still governs for 2026 and beyond.⁵

The Debt Limits That Cap Your Deduction

Even when every dollar went to home improvements, there is a ceiling on how much qualifying mortgage debt can produce a deduction. The cap depends on when the debt was taken out.

Debt incurred after December 15, 2017: interest is deductible on up to $750,000 of combined acquisition debt, or $375,000 if married filing separately. That total covers your first mortgage plus any HELOC balance used for qualifying purposes.³
Debt incurred on or before December 15, 2017: the older $1 million cap ($500,000 if married filing separately) still applies to grandfathered loans.⁴

The limits are combined totals across your main and second home. If you carry a $600,000 first mortgage from 2020, only $150,000 of a new HELOC used for improvements fits under the $750,000 cap. Interest on anything above the ceiling is not deductible even if the money was spent on qualifying work.

Calculating Deductible Interest on a Mixed-Use HELOC

If you used the HELOC for a mix of home improvements and personal spending, only the interest tied to the improvement portion is deductible. You have to trace the loan proceeds to specific expenses, a process the IRS calls interest allocation, and the basic rule under Treasury Regulation § 1.163-8T is that interest on a debt is allocated the same way the debt itself is.⁶

Say you drew $80,000 and spent $50,000 on an addition and $30,000 on personal expenses. That makes 62.5% of the interest potentially deductible and 37.5% not. Apply the ratio to the total interest on your 1098.

The IRS allows a 30-day window to keep the tracing clean: any payment made within 30 days before or after loan proceeds hit your account can be treated as paid from those proceeds.⁷ Deposit HELOC funds on March 1 and pay the contractor on March 20, and the link is easy to defend. Let months pass and the tracing gets harder.

As you pay the HELOC down, repayments are applied against the personal-use portion first, which can gradually shift the deductible percentage over the course of the year.⁷ Keep your HELOC closing statement, bank statements showing where the funds went, contractor invoices, and receipts for materials for at least three years after filing the return that claimed the deduction.⁸

How to Report It on Your Return

To deduct HELOC interest, you have to itemize on Schedule A of Form 1040 rather than take the standard deduction.⁹ Enter the deductible amount on line 8a, the home mortgage interest line.

If the amount you deduct is less than what your 1098 reports (common with mixed-use HELOCs), the Schedule A instructions say to attach a statement explaining the difference and write “See attached” next to line 8a. A short note works: “Interest reduced because $X of the HELOC principal was not used to buy, build, or substantially improve the home.”¹⁰ That heads off the automated IRS notice triggered when your Schedule A does not match the 1098 on file.

Whether Itemizing Beats the Standard Deduction

Itemizing only helps if your total itemized deductions come in higher than the standard deduction. For 2026, the standard deduction is:⁵

Married filing jointly: $32,200
Single: $16,100
Married filing separately: $16,100
Head of household: $24,150

Add your HELOC interest to your other itemizable expenses (property taxes and state income taxes up to $10,000 combined, charitable contributions, and the rest). If the total does not clear the standard deduction, the HELOC interest deduction does not actually help you. A single filer paying $3,000 in HELOC interest needs another $13,000 of itemizable deductions before the HELOC piece starts changing the tax bill. Run the numbers before counting on the deduction.

What to Do If You Don’t Receive a 1098

If your HELOC interest came in under $600 for the year, no 1098 is required and none will arrive.² You can still deduct the qualifying portion. Pull the total interest from your year-end lender statement and report it on Schedule A. Where the form expects a 1098, enter the lender’s name and taxpayer identification number.

If you paid $600 or more and mid-February passes without the form, call the lender and ask for it. Your year-end account statement has the same interest total in the meantime.

1
Internal Revenue Service. About Form 1098, Mortgage Interest Statement
2
Internal Revenue Service. Instructions for Form 1098 – Mortgage Interest Statement
3
Internal Revenue Service. Publication 936, Home Mortgage Interest Deduction
4
Office of the Law Revision Counsel. 26 USC 163 – Interest
5
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
6
eCFR. 26 CFR 1.163-8T – Allocation of Interest Expense Among Expenditures (Temporary)
7
Internal Revenue Service. Publication 550, Investment Income and Expenses
8
Internal Revenue Service. How Long Should I Keep Records
9
Internal Revenue Service. About Schedule A (Form 1040)
10
Internal Revenue Service. Instructions for Schedule A (Form 1040)