How to make an election to transfer HELOC interest...
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Returning Member

How to make an election to transfer HELOC interest from main house used to acquire rental to rental expenses

Hi,

 

I took out a HELOC on my main house A in mid 2018 to help purchase a rental property B across the street (in addition to mortgage on that rental property). I renovated the rental house B in 2018/2019 and started renting in mid 2019. For 2019, I can deduct the mortgage for B as rental expense. I was curious about the HELOC on A used 100% (paper trail exists) to purchase B. I did not deduct the interest on the HELOC on A in 2018 as neither the rental was ready for move-in nor would my main house qualify (mortgage is above 1M).

 

I contacted a tax professional that confirmed that I can indeed deduct the HELOC interest for the rental property B. He advised that I should "make an election to transfer heloc interest to the rental expenses" confirming that I should make "a formal election" vs. simply allocating the HELOC interest on Schedule E for B. I am a bit stumped on how to do such a "formal election" in TurboTax.

 

Any advice is appreciated!

3 Replies
Level 3

How to make an election to transfer HELOC interest from main house used to acquire rental to rental expenses

there is no formal election for the allocation you are talking about.

Returning Member

How to make an election to transfer HELOC interest from main house used to acquire rental to rental expenses

To confirm, I just take the HELOC interest and deduct on Schedule E in addition to mortgage interest for property B, correct?

Level 3

How to make an election to transfer HELOC interest from main house used to acquire rental to rental expenses

Yes.

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