Tax reporting when using home equity for RE purchase
Current situation: I have a HELOC I used to purchase an investment property. Every year I report the interest from the HELOC on the schedule E for the investment property. Easy and simple.
Potential situation: My home's value has increased and mortgage rates have dropped, so I'm thinking of refinancing my mortgage and paying off the HELOC. I would then get a 1098 from my mortgage company, but it would be tied to my primary residence. Is there some way I could figure out which percentage of the mortgage interest is tied to the investment property and still report that as a deduction on schedule E? I'm over 10,000 in property taxes on my primary residence (I live in a high tax state), so I'd hate to lose this deduction.