Is home equity loan interest always deductible?

The answer really depends on the purpose for which you use the loan proceeds.  The new tax law suspended from 2018 to 2026 the deduction for interest paid on home equity loans, home equity lines of credit and second mortgages.  However, the IRS has now issued guidance on when interest on such loans will be deductible.  Generally the interest is deductible if the proceeds were used to buy, build or substantially improve the taxpayer’s home that secures the loan.  For example, if the loan is used to build an addition to the home, it generally will be deductible, whereas if the loan is used to pay off credit card debt, it will not be deductible. There are some other conditions, such as a ceiling on the amount of the loan that qualifies.