Is a home equity payment eligible to be included in the housing allowance?
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Home Equity Loan Payments
VVickey
It would depend on what the home equity loan was used for. If it was used for personal items such as a car, medical expenses, education expenses, etc. then the IRS has ruled it is not permissible to use the second mortgage for qualifying housing allowance expenses. If it was used for home improvements or any other house related expense mentioned in this page: https://www.freechurchaccounting.com/housingallowanceexpenses.html then it would be allowable. See IRS Letter Ruling 9115051. Tax Court: Rasmussen v. Commissioners, T.C. Memo. 1994-311