You are taking an equity loan from your main home to buy rental properties.
In that case, you can deduct the loan interest as a rental expense on schedule E, or as personal mortgage interest on schedule A (but not both).
If you deduct the interest as personal mortgage interest on schedule A, your deductible mortgage amount is equal to the acquisition cost of your home plus $100,000. The acquisition cost is what you paid, plus the cost of any permanent improvements.
- Let's say you bought your home for $100,000 and it is now worth $500,000 and you made $50,000 of improvements. The most mortgage interest you can deduct is on a loan balance of $250,000; which could include any combination of your primary mortgage and one or more HELOCs. (For example, if the main mortgage is paid off you could have up to $250,000 of HELOC. If the main mortgage balance is $40,000, you could deduct interest on up to $210,000 of HELOC.)
I'm not aware of any limits on deducting the interest as a rental expense, so that is probably the better way to go.