Discussion:Rental LOC interest deduction
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Discussion Forum Index --> Tax Questions --> Rental LOC interest deduction
| 15 September 2007 | |
| I have a client who took a LOC out on their rental property in order to remodel their home. Where should this interest be deducted? | |
Death&Taxes (talk|edits) said: | 15 September 2007 |
| Using tracing rules I have to wonder if it is deductible at all? It is not secured by the principal or second residence of the taxpayer. | |
| 15 September 2007 | |
| I wonder ... So the client got the proceeds from the LOC on the rental property and remodelled his home. Probably personal non-deductible interest. Of course if the client later gets an LOC (or refi) on his home, and pays off the LOC on the rental property, then he/she could deduct the interest as HE interest up to $100K of principal.
However, assume the client has already exceeded the $100K HE cap on his home. If he/she then borrowed more money against the home, and paid off the rental property LOC debt that was used TO REMODEL HOME, would it then qualify as additional Home Acquisition debt, and therefore be deductible? I would think so. Any confirmation appreciated, I have a situation like this. | |
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