Yes, the IRS can give you a HELOC tax deduction for your interest payments. Before taking out a HELOC or home equity loan, you should compare the tax advantages of both. In some cases, one option might work better than another. In order for a HELOC to be tax deductible you will need to prove that you used the funds to "buy, build, or substantially improve." In addition, the funds need to be spent on the property that was used to secure the HELOC. HELOC loans taken after 2017 must be used for qualifying home improvement projects in order to be tax deductible.