Can a LLC borrow from a HELOC and pay back the interest as a loan

Question

Thinking about some ways to do creative finances on buying property with no money down.

If someone got a HELOC on their personal property and used the funds to buy a rental property in turn the income from the rental could pay back the line of credit I think up to this point it is 100% possible.

The next question though is can you write off the interest portion as a loan to your LLC as an expense.

Thanks for any comments and or suggestions on this matter

Kyle J. · Answer

@Gary David You’re not the only one who has been confused by this. However, it’s been discussed on here quite a few times and the answer has never changed (pre or post 2018) IF we’re talking about the deductibility of interest for business/investment purposes.

Here’s just one of the prior posts where several of the tax experts you asked for provide clarity on pretty much the exact scenario you asked about:

https://www.biggerpockets.com/forums/51/topics/436570-is-interest-on-a-heloc-tax-deductible

Hope that helps!

Kyle J. · Answer

If you get a HELOC (or any loan) on your personal residence and use it to buy a rental property, the interest will be a tax-deductible expense against the rental property that you bought. You don’t even need a LLC or to get creative to do it. It’s completely allowed.

Gary David · Answer

@Kyle J.thanks that clears it up I should have done deeper searching before posting

Thank you for the link

Gary David · Answer

Ohh it was my understanding that since 2018 you could only write off the interest expense if you used the HELOC to improve your personal property. I guess this is where it gets fuzzy for me if a LLC owns the improving/purchased property is it not the same as me?

Maybe a tax expert can provide some clarity.

Peter Philando · Answer

velocity banking ..... check out Denzel Napoleon Rodriguez on Youtube.

Peter Philando · Answer

What @Kyle J. said is correct. If you want to get creative with the HELOC and try to pay off properties early, then check out velocity banking (it's not for everyone, but of course everyone can execute it). This young guy is really smart with the numbers

Can a LLC borrow from a HELOC and pay back the interest as a loan

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