@Whodini @NCperson
Say your home acquisition indebtedness is 150K and borrrow 500K in total against the home in a refinance. To begin with your new home acquisition indebtedness is at 150K. Now rest 350K is __not__ home equity indebtedness anymore once you assign it to buy a rental. Interest expense for this 350K is deductible in schedule E against the income on the rental property. Say you buy a a car for 350K, at this point interest incurred on 350 K can't be set off against anything. You have a choice to pay off personal loans (loans for which you can't set off incurred interest against anything) before you pay off loans which are sued for earning interest. In your case, you can first pay off your rental home and then start paying off your primary home. Your mortgage on home was 150K and because all of 350K out of 500K was used for rental home, you have 0 home equity indebtedness, you have assigned that loan to the rental.
