Short answer. Providers don't state how their agreements are taxed, and at least one says so plainly. Treat the tax question as open until a tax professional who has read your actual agreement answers it. Your property tax bill doesn't change: you keep paying it.
What the providers say
Point says it can't provide tax advice or warranties about the tax treatment of its HEI, and tells homeowners to consult a tax advisor before receiving funds, because tax laws are complex and vary by state. (Point help center)
The other providers' FAQ pages we reviewed don't address the tax treatment of the agreement at all.
What is clear
- You still pay your property taxes. The HEI doesn't change who owns the home. Unlock tells homeowners they must keep paying their mortgage, taxes, and HOA dues as usual (Unlock FAQs), and Point says falling behind on property taxes risks putting the agreement into default (Point help center).
- An HEI isn't structured as a loan with interest. Providers describe it as an investment in your home with no monthly payments and no interest. Whether any part of what you repay is deductible is exactly the kind of question to ask a tax professional; don't assume it works like mortgage interest.
- The tax answer can differ from the cost answer. Our calculator shows the economic cost of each offer, before any tax effects.
Questions to take to a tax professional
- Is the cash I receive at funding taxable income in the year I get it?
- When I settle by selling the home, how does the payment to the provider affect my gain on the sale?
- If I settle without selling, by buying out the provider with savings or a refinance, how is that payment treated?
- Is any part of the settlement deductible, and why or why not?
- Does my state treat it differently from the federal rules?
Bring the full agreement, not a summary: the answers depend on how the contract is written.
Frequently asked questions
Is the money from a home equity investment taxable income?
Providers don't say. Point explicitly declines to give tax advice and tells you to consult a tax advisor before receiving funds. Ask a tax professional with your agreement in hand.
Can I deduct what I pay a home equity investment company?
Don't assume so. HEIs aren't structured as loans with interest, so the rules for deducting mortgage interest may not apply. Get a tax professional's answer for your agreement.
Do I still pay property taxes with an HEI?
Yes. You still own the home and must keep paying property taxes, insurance, and your mortgage. Falling behind can put the agreement into default.
Next: see what an HEI would cost you before taxes on the HEI Calculator, or read Does a home equity investment affect your credit?
Educational information only, not tax advice.