Mortgage Interest

Forum|Forum|5 years ago
February 6, 2021
1 reply
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I took out a mortgage on my home to buy a small business. The small business includes two buildings I collect rent on. Since my personal home is on the mortgage, I assume I cannot list the interest as a business expense. I list the interest as a personal expense. Am I correct?

TurboTax Home & Biz Windows

Best answer by ToddL99

Since you took out the loan for business purposes only, you can claim the interest as a business expense.

You do not need to itemize deductions to claim this as a business expense. Enter them in the Interest Expense interview under Business income and Expenses > Business Expenses > Other Common Business Expenses

The fact that the loan is secured by your primary residence (or another property) does not disqualify you from claiming the interest as a business deduction.

From Publication 535 Business Expenses:

"The allocation of loan proceeds and the related interest is not generally affected by the use of property that secures the loan."

ColeenD3

Level 15

It depends on what you specifically used the money for in regards to the rentals.

If you used the proceeds of a home loan for business purposes, enter that interest on Schedule C if you are a sole proprietor, and on Schedule E if used to rental property.

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kearantAuthor

Level 2

I used the mortgage 100% to buy the business. The mortgage however list my personal home and does not list the rental property. So just to be clear I can use the interest as a business expense..

ToddL99Answer

Level 13

Since you took out the loan for business purposes only, you can claim the interest as a business expense.

The fact that the loan is secured by your primary residence (or another property) does not disqualify you from claiming the interest as a business deduction.

From Publication 535 Business Expenses:

"The allocation of loan proceeds and the related interest is not generally affected by the use of property that secures the loan."