They Followed Bad Advice and Borrowed $50K They Didn’t Need

• HELOCs are not eligible for tax deductions unless the funds are used to make significant home improvements under current law.

• A couple borrowed $50,000 through a HELOC based on false advice about tax benefits that expired in 2017.

• Paying interest to generate a smaller tax deduction results in a net loss rather than savings.

• If you’re thinking about retirement or know someone who is, here are three quick questions that make many Americans realize they could retire earlier than expected. It takes 5 minutes to Learn more here

Many Americans still allow tax misconceptions to influence their borrowing decisions, even though taxes should never drive major financial moves. One of the most persistent misunderstandings is the belief that every type of mortgage debt yields valuable tax savings. This assumption continues to spread, and is often repeated by advisors who should be fully aware of the rules.

During the November 21 episode of The Dave Ramsey Show, a caller told that their financial advisor encouraged them to open a $50,000 home equity line of credit just for the tax deduction. The couple took the advice and are now taking on the debt, convinced they made a strategic tax choice.

Ramsey quickly corrected this misconception. “There is no tax write-off for a HELOC unless you use it for home improvements. He said. The Tax Cuts and Jobs Act of 2017 eliminated deductions for home equity borrowings that are not tied to major home improvements. Using a HELOC for everyday spending, investments, or debt consolidation provides no tax benefit at all.

This means that the caller’s advisor either misunderstood existing tax law or chose to prioritize loan activity over responsible routing. Ramsey urged the caller to pay off the HELOC immediately and rethink his relationship with that advisor.

The couple now faces interest charges on a $50,000 balance they received for a non-existent tax benefit. What they thought was smart, tax-advantaged borrowing turned into regular consumer debt secured by their homes.

This situation highlights an uncomfortable truth. Some financial advisors don’t always act in your best interests, and outdated tax advice can be costly. Even if your HELOC qualifies for a discount, which it doesn’t, the math usually fails to work in your favor. Paying $3,000 in interest to save $750 in taxes is not a strategy. It’s just a loss.

The couple borrowed $50,000 they didn’t need and attached it to their home, doing so on a tax subsidy that expired in 2017. They now pay eight to ten percent interest on consumer spending while their advisor likely earns a commission.

The biggest issue is not the tax rules. It’s a case of caution any time advice leads you to take on debt in pursuit of supposed benefits. When a recommendation requires borrowing money, it is wise to get a second opinion from someone who has nothing to gain from the loan.

You might think retirement is about choosing the best stocks or ETFs, but you’d be wrong. See even large investments can be a drag in retirement. The difference is simple: accumulation versus distribution. This difference is causing millions to rethink their plans.

The good news? After answering three quick questions, many Americans found they could do just that Retirement previously Than expected. If you’re thinking about retirement or know someone who is, take 5 minutes Learn more here.