Tax Implications of HELOC Against Rental Property

[Ben D.]

Hello BPers,

Earlier this year (May) I obtained a HELOC against a rental property that I owned free and clear. I then combined funds from that HELOC with some of my own cash to purchase another rental outright. Has anyone here done something similar and if so, how was the HELOC handled from a tax standpoint? I use TurboTax to complete my tax return each year and for each of your rental properties TurboTax usually asks "Did you refinance this property?". My assumption is that I will just say "yes" there and plug in the interest expense. Could it really be that simple or am I missing something?

Thanks in advance for your responses.