Electing my mortgage debt 'not secured by home' Pub 936

[aag12]

Has anyone gone through the process of electing one of their mortgages as 'not secured by home'?

I am looking for feedback on a tax strategy optimizing mortgage interest deduction. I have 2 residential properties & mortgages, both above the 750k deduction limit. Neither are investment properties. My intent is to declare one property as 'not secured by home' to optimize my deduction. One property has an interest rate of ~2.5% while the other property is >6%. 

Few questions i had

1. How do i actually declare this to the IRS? Would i just attach a letter to my return saying 'i declare mortgage XYZ to not be secured by home and to be treated as non-secured interest deduction?'
2. Any risk in leveraging this strategy? (Any new publications that negate this strategy, any reasons i may not be eligible, or pitfalls besides my question #3)
3. How do i revoke this in the future if i want to? Unclear what 'consent of the IRS' means and what the requirements are for them to approve this? 

I found two IRS publications that support this strategy: 

Publication 936, pg 4, paragraph 2&3:

 Choice to treat the debt as not secured by your home. 

You can choose to treat any debt secured by your qualified home as not secured by the home. This treatment begins with the tax year for which you make the choice and continues for all later tax years. You can revoke your choice only with the consent of the IRS. You may want to treat a debt as not secured by your home if the interest on that debt is fully deductible (for example, as a business expense) whether or not it qualifies as home mortgage interest. This may allow you, if the limits in Part II apply, more of a deduction for interest on other debts that are deductible only as home mortgage interest.  

https://www.irs.gov/pub/irs-pdf/p936.pdf

'Reg. 1.163-10T(o)(5)'

  The regulations under section 1.163-10T(o) and Publication 936 both state that taxpayers may make an election to treat a debt that is secured by a qualified residence as not secured by a qualified residence.3 The election must apply to the entire indebtedness, and the election is made by reporting the interest on the return as business interest or other deductible interest rather than qualified residence interest. Late elections have been permitted under section 301.9100 of the regulations. A purpose of this election is to permit a debt that is allocable to trade or business expenses, and thus deductible without regard to the section 163(h) deduction, to not “use up” the limitation, thereby causing otherwise deductible debts to fail to qualify under the limitation. In addition, the election permits interest on the debt to qualify as an “above the line” deduction (i.e., deductible under section 62 as a deduction allowable in determining adjusted gross income) to the extent the debt is allocable to a trade or business or rental expenditure.   

 https://www.irs.gov/pub/irs-wd/1201017.pdf

[DianeW777]

It depends. As indicated in the reference you provided, the loan would need to be associated with a trade or business for any deduction on the mortgage you might choose to elect to be not secured by your home.

• A purpose of this election is to permit a debt that is allocable to trade or business expenses, and thus deductible without regard to the section 163(h) deduction, to not “use up” the limitation, thereby causing otherwise deductible debts to fail to qualify under the limitation.
• The election must apply to the entire indebtedness, and the election is made by reporting the interest on the return as business interest or other deductible interest rather than qualified residence interest.
• This treatment begins with the tax year for which you make the choice and continues for all later tax years. You can revoke your choice only with the consent of the IRS. 
• A statement attached to your return would let the IRS know and approve.  

It is not a common circumstance in my experience. This could be utilized and part of the debt would be considered used for business expenses.  

• You may want to treat a debt as not secured by your home if the interest on that debt is fully deductible (for example, as a business expense).