Taylor Financial

Can you still deduct interest on a HELOC?

Yes, but the rules are not what many people remember.

Under the old rules, people often talked about deducting interest on the first $100,000 of home equity debt.

Today, the bigger question is:

What did you use the money for?

HELOC interest may be deductible only if the money is used to buy, build, or substantially improve the home that secures the loan.

So if you use a HELOC to remodel a kitchen, replace a roof, add a room, or make a major improvement to your home, the interest may qualify.

But if you use that same HELOC to pay off credit cards, buy a car, take a vacation, or cover personal expenses, the interest generally does not qualify.

Same loan.

Potentially a very different tax result.

And remember, you only benefit if you itemize deductions.

The tax treatment is not based on how much you borrowed. It is based on what you did with the money.

That is where planning matters.

Financial freedom does not happen by accident. It happens by design.

Nobody likes seeing losses in their portfolio.

But not every investment loss is wasted.

With tax loss harvesting, losses in a non qualified brokerage account may be used to offset gains elsewhere in your portfolio. And if losses exceed gains, you may be able to use up to $3,000 per year to offset ordinary income, with the rest carrying forward into future years.

The key rule to watch is the wash sale rule. You generally cannot sell an investment for a loss and immediately buy it right back without risking the loss being disallowed by the IRS.

The big takeaway: losses are not always just losses. When used properly, they can become part of a smart after tax investment strategy.

Reach out if you want to understand how this may apply to your situation.

A Donor Advised Fund, or DAF, can be one of the more tax efficient charitable giving tools available, especially during a high income year.

Think of it almost like a charitable investment account.

You contribute cash or investments into the account.

You may be eligible for a charitable deduction.

Then you can recommend grants to charities over time.

One area where this can become especially powerful is with appreciated securities.

For example, let’s say you bought stock years ago for $20,000 and today it is worth $100,000.

If you sold the stock first, you may owe capital gains taxes on the $80,000 gain.

But if you transfer those shares directly into a Donor Advised Fund, you may be able to reduce or avoid capital gains on the donated amount, subject to IRS rules, and may be eligible for a charitable deduction based on fair market value, subject to applicable limits.

This can be especially helpful in high income years, such as when you sell a business, exercise stock options, receive a large bonus, or complete a Roth conversion.

This strategy is often called “bunching.”

You stack multiple years of charitable giving into one higher income year, potentially maximize the tax benefit, and then still give to charities gradually over time from the DAF.

The big takeaway:

A Donor Advised Fund can help combine charitable intent with tax planning.

It is not right for everyone, but for the right family, it can create flexibility, tax efficiency, and a more strategic way to give.

Here’s something that catches a lot of investors off guard.

You can owe taxes on an investment even if the investment itself lost money.

This often happens with mutual funds because the fund manager may sell positions inside the fund at a gain. Those gains can be passed through to shareholders as capital gains distributions.

So even if your fund is down for the year, you may still receive a taxable distribution.

That does not mean mutual funds are bad, but it does mean investors should understand how different investments are taxed and why tax efficiency matters.

The big takeaway: taxes do not always follow your account balance. They follow the activity inside the investment.

At Taylor Financial, we help clients look at the bigger picture, including investments, taxes, retirement, estate planning, and long term strategy.

There is a tax many high earners do not realize they are paying.

It is called the Net Investment Income Tax, or NIIT.

This is an additional 3.8% tax that may apply to certain types of investment income once your income crosses specific thresholds. That can include interest, dividends, capital gains, rental income, and other passive income.

The part that catches many people off guard is the “crossover zone.” A bonus, stock sale, Roth conversion, or other income event could push you over the threshold and expose part of your investment income to this additional tax.

That is why tax planning is not just about how much income you have. It is also about when you recognize that income.

Coordinating with your advisor and CPA can help you make more informed decisions around investments, taxes, and long term planning.