Updated over 7 years ago on .
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Cash out refinance on rental: is the interest deduction reduced?
Let's say I have a rental property. I do a cash out refinance and don't reinvest the money I pulled out. Does that mean that I can no longer deduct the full interest on the rental property mortgage? I know the dollar value of the interest and principal payments would change, what I'm asking is will I still be able to deduct 100% of the interest after the cash out refinance or would it be prorated?
What about if I DO reinvest the proceeds in more rentals?