When we first purchased the rental property, we used the Line of Credit from our primary residence as down payment and secure a mortgage using the rental property. However, we refinanced the rental mortgage using primary residence as lien since the interest rate is lower with primary residence. We received two 1098(s). Both indicate the Primary residence is the property securing mortgage.
Can we Report Both mortgage payments, the original Line of Credit and the refinanced loan with primary residence, on the Rental Property Income section as mortgage expense? Or should these be reported as mortgage payment in the Deductions section?
You can only deduct interest on a rental property in the rental property section if the rental home secures the loan.
If your primary home is the home that secures the rental, then deduct the interest on the personal side under Deductions and Credits.