Question
Personal loan as down payment on rental property
I used a personal loan (secured by a different investment property than the one in question here) as down payment for an investment property. I understand I can deduct the interest portion of the payments as an expense but I'm wondering how to handle the principal portion. Is the original principal added to the basis of the property and depreciated over 27.5 years or can I deduct the principal payments as business expenses? Example, property purchased for $220K, used personal secured loan of $44K as down payment and mortgage of $176K. How do I handle the $44K?
