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Level 2

Question

Interest expense

Forum|Forum|6 years ago
February 22, 2020
2 replies
0 views

I have an LLC that flipped a house in 2019. I used a HELOC from my personal residence to finance the flip. I assume I record the sale on schedule C (plan to do more) and record the full cost of the rehab under purchases (as opposed to COGS with inventory). However, am I able to include the interest expense from the HELOC? If so, does it also get listed under purchases?

Level 14

No. To include the interest expense from the HELOC, it must be secured by the investment property.

Click the link for additional details on flipping houses and how to report it for tax purposes.

Level 15

@KathrynG3 wrote:
No. To include the interest expense from the HELOC, it must be secured by the investment property.

There is no requirement that it be secured by the property. The interest *IS* deductible.

Level 2

which answer is correct

Level 2

I've had two conflicting answers