Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 16%
$32.50 /mo
$390 billed annualy
MONTHLY
$39 /mo
billed monthly
7 day free trial. Cancel anytime

Let's keep in touch

Subscribe to our newsletter for timely insights and actionable tips on your real estate journey.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions
Followed Discussions Followed Categories Followed People Followed Locations
Tax, SDIRAs & Cost Segregation
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated over 6 years ago on . Most recent reply presented by

User Stats

3
Posts
0
Votes
Jeff Smith
  • Rental Property Investor
  • San Francisco, CA
0
Votes |
3
Posts

Tax Deductible for HELOC from an Investment Property

Jeff Smith
  • Rental Property Investor
  • San Francisco, CA
Posted

Hi BP friends,

I applied for a HELOC on my investment property, and I'd like to use it as contingency fund when I need to invest in another investment property in future. May I know if the interests from that HELOC is tax deductible? Can I just group the HELOC interest together with mortgage interest in that investment property?

I applied for HELOC on my investment property is because

(1) I have more equity in this investment property than my primary residence, and 

(2) due to recent change in tax law, HELOC from primary residence is only deductible when it's used for home improvement on that property, and I can't use it for other investment.

Thus I opted for HELOC on my investment property for my next deal, and get HELOC interest tax deductible on that investment property.

Is my strategy above makes sense? Welcome any suggestions as I'm preparing for my next investment deal. Thanks so much.

Most Popular Reply

User Stats

4,293
Posts
3,344
Votes
Ashish Acharya
#1 Tax, SDIRAs & Cost Segregation Contributor
  • CPA, CFP®, PFS
  • Florida
3,344
Votes |
4,293
Posts
Ashish Acharya
#1 Tax, SDIRAs & Cost Segregation Contributor
  • CPA, CFP®, PFS
  • Florida
Replied
Originally posted by @Jeff Smith:

Hi BP friends,

I applied for a HELOC on my investment property, and I'd like to use it as contingency fund when I need to invest in another investment property in future. May I know if the interests from that HELOC is tax deductible? Can I just group the HELOC interest together with mortgage interest in that investment property?

I applied for HELOC on my investment property is because

(1) I have more equity in this investment property than my primary residence, and 

(2) due to recent change in tax law, HELOC from primary residence is only deductible when it's used for home improvement on that property, and I can't use it for other investment.

Thus I opted for HELOC on my investment property for my next deal, and get HELOC interest tax deductible on that investment property.

Is my strategy above makes sense? Welcome any suggestions as I'm preparing for my next investment deal. Thanks so much.

If you had used the HELOC from primary residence to fund the investment property, the interest would still be deductible. Tax reform did change the personal use aspect of it, but the proceeds used for business/Investment activities are still deductible.

With the same notion, yes the entire interest is deductible from the LOC when you use the entire fund to purchase next investment property. If you use a portion of the fund, a portion of the interest would be deductible. The interest is deductible at the new property level, not at the investment property that you took out your LOC

Look Like you do your own research. Look for interest tracing rules. 

business profile image
INVESTOR FRIENDLY CPA®
5.0 stars
217 Reviews

Loading replies...