Home Equity Loan to payoff rental property loan

Forum|Forum|4 years ago
April 2, 2022
1 reply
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Hi,

If I take home equity from Primary Home and use it to pay off my rental property loan, can I continue to deduct interest expense from the Home Equity Loan on Schedule E?

PattiF

No, you cannot deduct the interest expense from the Home Equity Loan on Schedule E.

Interest on Home Equity Line of Credit (HELOC) debt is tax-deductible if you use the funds for renovations to your home; “buy, build, or substantially improve". What’s more, you must spend the money on the property in which the equity is the source of the loan. If you meet the conditions, then interest is deductible on a loan of up to $750,000 ($375,000 or more for a married taxpayer filing a separate return).

IRS Home Equity Loans

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