Allocation of repayment on mortgage used to purchase multiple properties

[Dave918]

I used some of the money from a refinance of the mortgage on rental property A to buy rental property B. So based on the tracing rules I need to allocate the mortgage interest between rental property A and rental property B. I have been allocating the repayment to rental property B since it is the smaller loan so it can be paid off sooner which will simplify things. Would this procedure be acceptable to the IRS? Thank you.

[KrisD15 · Accepted solution]

Yes, as long as you are allocating the interest, the repayment needn't be done in any required order. 

Be sure to keep records with your tax file.