topic 2nd mortgage for a rental property, is it dedutible? in Investors & landlords

2nd mortgage for a rental property, is it dedutible?

cutebabymary — Sat, 01 Jun 2019 20:16:05 GMT

Yes, your second mortgage interest on a rental property i...

Ashby — Sat, 01 Jun 2019 20:16:06 GMT

Yes, your second mortgage interest on a rental property is completely deductible.

Landlords may take out a second mortgage or home equity line of credit to improve a rental property or cover other property- or business-related expenses for a rental. The interest payments a landlord makes on these loans is tax deductible. For example, a landlord may obtain a HELOC to pay for a new roof or prepare and improve a vacant property for new residents.

Re: 2nd mortgage for a rental property, is it dedutible?

Jaredhaxton — Thu, 19 May 2022 04:39:09 GMT

Does it matter what the funds are spent on? I understand if you use it all to repair the place, that makes it a deductible expense. But what if you take out a second mortgage of $75,000 and spend it on other debts and items not related to the rental property... Would the interest on the second mortgage still be a deductible expense against the rental property? Thanks!!

Re: 2nd mortgage for a rental property, is it dedutible?

Mike9241 — Thu, 19 May 2022 05:08:10 GMT

there are tax rules requiring the tracing of the use of loan proceeds. so interest on the amount used to repair the property would be deductible on the rental schedule. interest on any portion used for personal purposes would not be deductible.