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Onlyme24
Level 2
March 24, 2026
Question

Heloc interest deductibility in California

  • March 24, 2026
  • 2 replies
  • 17 views

I have a client from CA who took out a $70k heloc and used it to pay her credit cards. Is the interest on the heloc tax deductible for CA since it was not used for home improvements? I know it’s not deductible for Federal but I’m not sure about California. 

2 replies

S
strongsilence
Level 10
March 24, 2026

Interest tracing.  It's one of the few cool things I know about taxes!

T
TaxGuyBill
Level 15
March 24, 2026

I'm not a California preparer so I could be wrong, but it is my understanding that California still uses the 'old' federal rules, which included being able to deduct interest on up to $100,000 of non-home purchases.

    sjrcpa
    sjrcpa
    Level 15
    March 24, 2026

    For regular tax, but not AMT. CA has its own AMT, too.

    The more I know the more I don’t know.
    T
    TaxGuyBill
    Level 15
    March 24, 2026
    @sjrcpa wrote:

    For regular tax, but not AMT. CA has its own AMT, too.

    That is good to know.  Thank you.

    Yet another reason to avoid California tax returns.  🤣

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