HELOC

AI is helping the IRS find tax problems and one in particular is about home equity loans (HELOC). These loans have grown in popularity over the past 15 years as the value of homes have increased. The original intent was to provide money to buy, build or substantially improve the home that secures the loan. When done this way the interest paid on the HELOC was tax deductible. This limitation was not clearly understood by many and the result was loans that were used to consolidate debt, to provide tuition or down payment to children or grandchildren were reported as tax deductible interest. With the new AI the IRS can now find these errant deductions and for all people over age 60 the tax man cometh. If the taxpayer has done this they have until Apr 15, 2026 to report the error and get a reprieve.