Hello Everyone, I recently bought a rental property using HELOC from my primary residence as a down payment. Is the interest paid on HELOC tax deductible? Appreciate your response. Thanks, Sai

Deductibility follows use of funds. That means interest is deductible based on what it is used for, not what the loan is secured against. If you used that HELOC money to buy a boat, it would not be deductible. If you got a HELOC against a rental and bought a boat, it would not be deductible. Since the interest was used to buy a rental property, it is deductible against that rental property. Be careful if you use your HELOC for different purchases that you split the interest to the appropriate use. For example if you borrowed $100,000 on your HELOC, $80,000 for a rental property and $20,000 for a personal boat, only 80% of the interest would be deductible.

Yes, it is at the rental level if you used 100% of the fund.

@Ashish Acharya @Natalie Kolodij if we cash out refi properties held in a multi-member LLC with a commercial loan, do we have to invest the funds under LLC vesting to deduct interest expenses, or by fact that the loan is under the LLC does it automatically qualify for expense reduction? One consideration for the LLC members is to distribute the acquired capital to invest separately. Our CPA has provided guidance but we would like to confirm.