Deductibility of Rental loan interest if loan was used to pay off personal loans
We pulled 200K out of our rental. With the new loan, 25% was still covering previous rehabbing and the 75% we used to pay off personal loans. Do you feel any of this interest is deductible on our rental property? I've been told that if we used the cash out money for personal loans that the interest is no longer deductible on the property.
Quote from @Sheila Peschges:
We pulled 200K out of our rental. With the new loan, 25% was still covering previous rehabbing and the 75% we used to pay off personal loans. Do you feel any of this interest is deductible on our rental property? I've been told that if we used the cash out money for personal loans that the interest is no longer deductible on the property.
If it's not mortgage interest and it's not used to renovate a property, then it may not qualify for a deduction. Check with a CPA because it may qualify as a deduction under other circumstances.
Thank you Nathan. I appreciate your input.
