RichardK
New Member

Investors & landlords

Yes, the interest allocated to the rental portion of the loan can be deducted from rental income. Click here to see IRS publication 535, section 4 Interest, which states "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 use." This is referred to as the Interest Tracing Rules.