@NCperson
Thanks for confirming that Bank's name for the loan doesn't matter. So let me rephrase using exact IRS terms.
Say that my current loan is 300K and whole of that is home acquisition debt (HAD for short). Say I now refinance and take a Lon of 600K, 300K being by HAD and rest 300K isn't HAD (I don't use it for home improvement etc). Let me call this HELOC portion of the debt.
1. It is clear to me that if I use HELOC portion for buying a rental, interest on the rental income can be set off against the rental income. Can the interest be set off even if I use 300K to pay off the existing loan on the rental property?
2. HAD of 300K remains at 300K till HELOC portion of 300K is paid off. Let's say it takes about 20 years for HELOC portion to get paid off. So, for next 20 years my HAD remains at 300K. Question is what's the mortgage interest on primary residence in Schedule A? is it 300K * 10% ( 10% being my loan interest rate) for next 20 years?
