Chris2
Level 2

Cash-out refinance on primary residence to buy a rental property

 I recently refinanced my primary residence and purchased an investment property. Initially, I was planning to cash-out my primary residence through refinance and use the money to make a down payment for the rental house. However, the refinance took more than 5 months to close, which is 3 weeks after I closed my rental purchase. When I do my tax return next year, can I still claim the interest and closing cost from the refinance as the expense for my investment property?


If the answer is yes, how much interest can I claim as the expense of investment? My primary house before refinance had a balance of 90K, I took out 65K and the new balance after refinance is 162K. The down payment for the investment property is only 40K. Since I cashed 65K I am planning to use the 25K to purchase another investment in the near future. If you happen to have any citation from the IRS it would be great! Thank you for your help in advance!