Deducting interest

Forum|Forum|3 years ago
November 16, 2022
1 reply
4 views

I took out a HELOC loan on my primary residence to purchase rental property. Can I deduct the interest as an expense using it as a passive activity?

LJane29

Level 6

Unfortunately the interest won't be deductible. It was not used to buy, build or purchase the primary home so it can't be taken as a part of itemized deductions (personal use). On the rental side, because the lien for the loan is NOT against the rental property then the interest is not deductible.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

JrdubAuthor

Level 2

Even if it's considered a "passive activity interest"?

LJane29

Level 6

Yes, it is based on what is securing the loan (your primary home) and what the loan is being used for (rental property). It wouldn't matter if it was passive (almost all rental income is categorized as passive) or active income generating.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"