@Critter-3 wrote:
You are mixing up the rules on a HELOC for a personal residential property and any loan for a business use property. The Sch A has a limitation but not the Sch C, Sch E or any other business tax returns.
The only rule you need to follow is the tracing rule where the loan is tied to the business property. SO pay cash and put a lien on the property anytime you wish as all the interest is deductible on the business/rental no matter how it comes about.
I know the 90 day rule is in writing for a mortgage, I said that above. It would seem reasonable to apply it to business property, but I don't know that.
How do you apply the tracing rule if you own the property debt-free, and borrow the money to "pay yourself back"? How is that deductible business interest? It's not allocable to any business activity. I agree that if the taxpayer borrows from property A to purchase property B (where B could be more real estate, or stocks and bonds, or almost any other investment) then the interest is a business expense against property B (but not property A). But here, the customer wants to purchase with cash on hand, then borrow to replenish their cash on hand. How is that traceable or allocable to a business activity?
