I have an investment property (rental) for which I have a mortgage. I can get a better rate and avoid closing costs if I take out a home equity loan or HELOC against the investment property and use it to pay off the mortgage rather than refinance. In this case, is the interest on the home equity loan or HELOC deductible? Also, can anyone point me to the pertinent IRS documents? A related question is in the eyes of the IRS is a home equity loan or HELOC any different than a mortgage for this specific case, i.e., could the laws change to prevent the deduction of interest from a home equity loan or HELOC while maintaining the deduction for a mortgage for this specific case?
