Hi!  I'm new here and I have a basic question. I own a Single Family home and deduct my mortgage interest. If I am buying an investment property am I also allowed to deduct my Mortgage interest? For investment properties (assuming I owned 10) is there a limit to how much mortgage interest you could deduct in total? Finally could you deduct mortgage interest in one property to reduce your tax liability from different property?  

Thanks!

K

Your personally interest is on Schedule A.

Your rental interest is on Schedule E.

They will have absolutely no effect on each other. 

The only limit is on your personal property of 1M (Pre 2018) or 750k principal limit after December of 2018. 

You can only deduct the amount that you have invested into the property so if you refinance and take out funds to buy a vehicle you cannot deduct the portion that was used for persona uses. It has to remain used for the rental or a new rental. You can look up the Interest Tracing Rules for more information.

Thanks for the Quick reply Steven. Just so I understand if I have a portfolio of investment properties I can deduct all the mortgage interest as long as it does not exceed what I have invested in the property? So if I had 10 properties with 100k invested in each ($1mm total invested) and my mortgage interest I paid for that year on all 10 properties in total was $1.1mm. I would only be able to deduct $1mm of that? 

Originally posted by @Kareem Shihab :

 So if I had 10 properties with 100k invested in each ($1mm total invested) and my mortgage interest I paid for that year on all 10 properties in total was $1.1mm. I would only be able to deduct $1mm of that? 

If you had $1mm invested, you’d never have anywhere close to $1mm in mortgage interest paid in a year. Even if you financed all the properties on credit cards you wouldn’t have to pay that much interest. 

Not sure if you might have been factoring in principal payments, but those aren’t deductible - just the interest paid is. 

If you have 1m in acquisition debt, you cannot deduct the interest on 1.1m.

That may clarify it a bit better.

If you pull out money for personal things it is not deductible. but if you refinance a property and use the cash to improve said property you can still deduct that interest.