After consulting with my financial advisor, he said that an argument can be made for allocating HELOC interest among the rental properties and personal use amounts. The percentage for personal use would not be deducted. Accurate documentation would be needed to determine the cost values used for the 4 rental properties and for amount for personal use. He referred me to PUB525-Business Expenses; Chap 4 - Interest.
"In general, you allocate interest on a loan the same way you allocate the loan proceeds. You allocate loan proceeds by tracing disbursements to specific uses."
"Secured loan. The allocation of loan proceeds and the related interest is not generally affected by the use of property that secures the loan."
