Thanks
@Carl and
@TaxGuyBill and
@tksca5 but I am still confused.
In December 2017 I purchased a new rental property as part of a "like-kind-exchange" of an old rental property (which I owned free & clear). I also took out a HELOC secured against my primary residence, which funds were used to:
(a) purchase the new rental property (as it was a more expensive new property)
(b) conduct repairs on the new rental property to ready it for the rental market
Do you agree with my understanding how to apply your guidance provided above:
(i) The amounts spent on (b) are deductible as repairs.
(ii) The amounts spent on (a) will go toward the basis in the property, and will if effect be deductible via depreciation
(iii) The HELOC interest on these amounts are deductible on schedule E line 12 for the new rental.
@Carl - the "twist" you mention specifically advises that interest on HELOC secured by primary is deductible if the funds were used to improve the rental; it does not mention if used to _purchase_. This is part of the clarity I seek.
Thanks both of you for taking the time to educate...
~Malcolm
