Family member/renter co-signing on a loan

[Chad Brown]

Hello! I have a property that my Mother in law is staying at currently, but I lived in for a few years prior to my marriage and have some equity built up unit. We are wanting to do a cash out refinance to pull some money out of it to purchase another rental. I received some advice on having my mother in law co-sign on the lease so that we could list it as a primary residence to pull more money out. My question is would we still be able to treat it as a rental for tax purposes? How does the impact my mother in law?

Thank you all in advance!