KJM14
Level 3
05-19-2023
09:47 AM
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While the rules for deducting interest on a cash out refi on rental property are usually straightforward, I had a (probably simple) question
With TCJA, I know you can't deduct the interest if the loan proceeds weren’t used to buy, build or improve property. So, you can’t claim a tax deduction if the proceeds were used to pay for personal expenses like high-interest debt, medical bills, etc. However, what if they are using proceeds to pay off a line of credit and that line of credit had been used to help buy a different house is that still deductible?
Similarly, if they refi rental property to directly fund improvement of their primary residence, is that deductible? That is, the refi proceeds don't have to go into the house that was refinanced.
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