Home equity loans are only tax-deductible under special circumstances. Currently, you can deduct interest on a home equity loan only when using the funds to buy or build a primary residence or second home, or when using funds to substantially improve a primary residence or second home. As of 2022, married couples filing jointly can deduct interest on up to $750,000 of mortgage debt, and married couples filing separately can deduct interest on up to $375,000 of mortgage debt.