@Critter-3 - can we go back on that answer as I wasn't following.
Assuming no rental, there are two homes. There was a cash out refi on Home #1, but none of the proceeds were used to built or improve THAT residence, so why would the cash out portion be tax-deductible at all? Only the 'aquisisition debt' would be tax deductible.
With regards to Home #2, that cash out refi money is not aquisition debt on Home #2 as it not a debt on Home #2 - it is equity.
Once Home #1 is a rental, why wouldn't all the interest related to the mortage on Home #1 be deductible on Schedule E? What interest end up on Schedule A, other than the interest on Mortgage #2 (if there is one) used to aquire Home #2?
thanks in advance!
