New Tax Reform Refinance my inv properties and payoff primary res

[Emil Matov]

Based on the proposed Tax Reform with the substantial increase of the Standard deduction would it make more sense to refinance my investment properties as a cash out and payoff the mortgage on my primary residence. It will allow me to increase the business expenses claimed by the two LLCs and I will just claim the standard deduction. Any advice?

[Paul Allen]

Originally posted by @Basit Siddiqi:

paying down a loan or mortgage is not an expense(business or personal). you are simply decreasing your liability from X to Y.

True. I got a bit sloppy with my terminology. 

The mortgage interest for OP's personal residence is a Schedule A personal deduction. The mortgage interest for his rental properties is a Schedule E business deduction. If I am understanding correctly,  OP wants to borrow more money on his business properties to pay off the loan on his personal residence.  Interest tracing rules do not allow deducting interest as a business expense if the money was borrowed for personal use. It doesn't matter what collateral is used to secure the loan, it matters what the money is used for. In this scenario it is being spent on a personal residence and therefore not deductible on Schedule E.