Thanks for the guidance. I would like to ask your opinion about the specifc situation. I am thinking of refinancing the mortgage on one of my investment properties (a rental house) to get some cash to use as a down payment for the purchase of another investent property. There would be three other factors to consider:
First, if needed, I will have to add some of my own cash to the 'cash out' from refinancing. I thought that this would not create any complexity, but now, after reading your point about 'comingling funds' I am not sure.
Second, there would definietly be some time lag (at least a few months) between refinancing and the purchase of another invstment property. I thought that I would not be allowed to use the interest payment on the cash out portion of refinancing as an allowable dedctible expense until I purchase the new invesment property, e.g., if it took me 6 months after refinancing to purchase another invstment property I would not be able to claim the interest payment on the cash out portion of refinancing for those 6 months (but after that I would be able to claim tax deduction for the cash out portin of refinancing).
Third, if a deduction for the cash out portion of refinancing is allowed, I will have to show that against the new investment property because I cannot increase the mortgage liabilty for the existing investment property.
Will truly appreciate your specific guidance on these points.
