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Level 1

Am I allowed to deduct the interest from a HELOC secured by my primary mortgage, but used for repairs on rental properties?

I have a Home Equity Line of Credit secured by my primary home / mortgage in MD.  I used $6000 of it to pay for repairs and improvements on a rental property I own in OH.  The rental property is rented to a tenant.  Am I allowed to deduct the interest on the money I borrowed?

2 Replies
Level 3

Am I allowed to deduct the interest from a HELOC secured by my primary mortgage, but used for repairs on rental properties?

No, you can only deduct the interest that was used to buy, build or substantially improve the home the mortgage is secured by.

Level 1

Am I allowed to deduct the interest from a HELOC secured by my primary mortgage, but used for repairs on rental properties?

I believe there are exceptions and that you can still allocate interest paid on expenditures to your rental property even if the loan was secured by your primary residence.  I don’t think the answer that was given above researched the interest tracing rules or if the interest paid was used in a trade or business or to generate income .... as rental property is used to generate income.  I was under the same impression at first but the more I researched various articles and consulted a CPA we both feel you can still allocate interest paid to an income producing property even if was secured on your primary residence.