tax implication for cash-out refinance

[Yoon Seokwoo]

I am trying to think of the best scenario to get maximum tax benefit for rental property in the following scenario. 

Say that I have a house that is paid off and I want to convert it to rental property. If I take cash-out refinance (e.g. 80% of equity) for this house so that I can use that money in some other investment, would it result in same (or simlar) tax benefit as like I have a refresh mortage on this house? 

[Ashish Acharya]

Originally posted by @Yoon Seokwoo:

I am trying to think of the best scenario to get maximum tax benefit for rental property in the following scenario. 

Say that I have a house that is paid off and I want to convert it to rental property. If I take cash-out refinance (e.g. 80% of equity) for this house so that I can use that money in some other investment, would it result in same (or simlar) tax benefit as like I have a refresh mortage on this house? 

The benefits come in two different ways:

- You will get to deduct the interest at the new activity level. Tax savings. 

- You will use the proceeds to leverage another property. The leveraged depreciation is going to give you additional tax savings.