What if Investment property becomes personal property?

Basically, your property taxes and mortgage interest are deductible no matter what, on real estate.  For the mortgage interest to be deductible, the loan on the property must be a secured loan. If you receive a 1098 - Mortgage Interest Statement from your lender, then you're good to go. They have until the 1st of March (I think) to send you that form.

Yes, you can deduct the real estate taxes on Schedule A combined with your home real estate tax. 

However, the mortgage interest is another issue, if the the loan is not secured by your main home or a home designated by you as a second or vacation home then it is not deductible as personal interest.  It may qualify as investment interest.

• Note:  A second home is a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities.

Publication 550 Investment Income and Expense- 

This publication provides information on the tax treatment of investment income and expenses, including information for individual shareholders of mutual funds or other regulated investment companies, such as money market funds. It explains:

• ·         what investment income is taxable and what investment expenses are deductible,
• ·         when and how to show these items on your tax return, and
• ·         how to determine and report gains and losses on the disposition of investment property and provides information on property trades and tax shelters.

TurboTax has more great information here:  What Are Deductible Investment Interest Expenses?

(Edited:  01.16.2017 | 9:08a)