Taking out home loan for investment property?

Question

I'm buying an 14 unit apartment complex and in my past real estate purchases, I've used a HELOC for the loan portion, which I do deduct on my tax return. Can I do the same process, except take a 30 year mortgage out on my (paid off) home to finance the loan portion of the apartment? And still deduct it on the real estate portion of my tax return? Cheaper rate and longer term this way.

Jack T. · Answer

Thanks for confirming!

Ashish Acharya · Answer

Yes you can.

You can take out the mortgage. The interest on the loan is traced to the activity that you will use the fund.

If you want 100% deduction on the interest , use the 100% fund to invest.

Remember, you are not deducting the interest expense in your personal return as itemized deduction.

You are taking expense as interest expense at the activity that you are investing the cash. So when you have the apartment, you can taken deduction as the expense against the rental income.

If there is entity involved, you might have to execute loan agreement between you and your entity too.

Taking out home loan for investment property?

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