Yes, it is possible to use a HELOC from a personal residence to improve a rental property. If you use the proceeds from a home equity loan to buy a rental property, operate a business, or for some other type of investment. the interest will not be deductible.
The Tax Cuts and Jobs Act of 2017, enacted Dec. 22, suspends from 2018 until 2026 the deduction for interest paid on home equity loans and lines of credit, unless they are used to buy, build or substantially improve the taxpayer’s home that secures the loan.
Normally, with home acquisition and home equity debt, the interest can can be deducted up to $1 million in home acquisition debt plus another $100,000 in home equity debt, for a maximum of $1.1 million combined for a couple, or $550,000 for a single filer. You cannot use Schedule E to deduct the interest from a personal home equity loan as a business expense on rental property. The taxpayer simply would not be allowed to deduct the interest.
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