Question

Can I deduct primary mortgage interest on primary home for rental property purposes

Forum|Forum|4 years ago
February 16, 2022
1 reply
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Hello,

I have a question not explicitly answered here. I have 2 rental condos with about $150K mortgage on it at around 5% interest rate. I also have a primary mortgage on my primary home for about $300K at around 2% interest rate. I have around $300K cash that I would like to apply against these mortgages. Can I use the 300K to pay off the higher interest rate mortgages on the rental condos and then subsequently write off the interest on my primary home against the rentals? This would yield the lowest effective rate and would be prudent to do aside from possibly not being able to deduct the interest. I am in California and take standard deduction.

TIA

M

MAK70

No, unfortunately, the deduction for the rentals will have to be the mortgage interest on the particular rental property.

N

naone1Author

Hi MaryK1101,

Thanks for the comments and appreciate your time. I have read that if I took a heloc on main home can be used to purchase a rental and that interest is deductible so I thought the method I mentioned would be tangential to that. Is it not true that the HELOC interest on primary home can be deducted from rental income on schedule C?

TIA!

Carl11_2

Employee

The Tax Cuts and Jobs Act of 2017, enacted Dec. 22, suspends from 2018 until 2026 the deduction for interest paid on home equity loans and lines of credit, unless they are used to buy, build or substantially improve the taxpayer’s home that secures the loan.

Since the rental property is not the property the secures the HELOC/Loan, the interest on the portion used to pay off the rental is not deductible.

https://www.irs.gov/newsroom/interest-on-home-equity-loans-often-still-deductible-under-new-law