Is HELOC interest deductible for rental property under the new tax bill for 2018 and does it matter whether the HELOC was used for refinancing vs. construction?

I own 2 rental properties that DO NOT HAVE a mortgage but DO HAVE a HELOC. In one case the HELOC was refinancing, and in the other case, HELOC proceeds were used for home improvements. I have read several reports that under the new tax bill that HELOC interest for a primary home is no longer deductable on schedule A. However, I am not sure what happens to rental properties on Schedule E. Any help is much appreciated.

387

Level 9

Jun 4, 2019 9:24:23 PM

Any mortgage amount (personal, rental, or business) that the money was used to buy, build, or substantially improve the home is deductible (personal residence interest may be limited to $750,000 of mortgage amount).

If the money was not used to buy, build, or substantially improve the home, a rental or business can still generally deduct the interest if the money was used for rental or business purposes.

Why sign in to the Community?

Is HELOC interest deductible for rental property under the new tax bill for 2018 and does it matter whether the HELOC was used for refinancing vs. construction?