My primary home is worth $ 310,000 and I had an outstanding loan of $ 55,000. I recently refinanced this with a cash-out option. New loan is $ 240,000 and cash-out amount was $180,000. Around $ 5,000 was closing cost.
I used this 180 K to buy 2 rental properties ($120,000 and $ 60,000). My question is whether the interest that I'll be paying on my primary home loan and closing cost that I paid above can be included as expense on these 2 rental properties ? If yes how much in terms of percentage for each ? I've heard about the tracing rule but not sure what that is. Can someone help. Thanks
