@Carl wrote:
Here's the bottom line. The percentage of interest of the equal percentage of cash out money from the refinance of your primary residence that was used to pay off the mortgage on the rental property is just flat out not deductible anywhere on your federal return. Period.
There is a duplicate of this discussion here,
https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/trying-to-get-clarifi...
@Carl I'm not understanding why this would not be a business expense. We have answered other taxpayers that, for example, if they borrow from commercial property A to buy property B, the interest is an expense against property B and the tracing rules must be followed. Or, if the taxpayer here had taken out an unsecured personal loan or credit card loan to pay off their commercial property, the interest would be a deductible business expense as long as it was traceable. Why does it matter if the loan used to pay off the commercial property is secured by the taxpayer's residence?
(BTW, since the residence was paid off at the time of the new mortgage, and all the proceeds were used to pay off the commercial property, no part of the loan is deductible on schedule A.)
