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null169
New Member

Will landlords be able to deduct the interest for home equity loans on their rental properties in 2018 with the new tax reform bill in effect?

 
8 Replies
Carl
Level 15

Will landlords be able to deduct the interest for home equity loans on their rental properties in 2018 with the new tax reform bill in effect?

Interest on rental property is NOT affected by the new tax laws which by the way, have NO EFFECT on your 2017 taxes. Since rental property is business property, the interest paid on the mortgage is a business expense, and fully deductible.

tabourj
New Member

Will landlords be able to deduct the interest for home equity loans on their rental properties in 2018 with the new tax reform bill in effect?

Reading the answer, I'm not clear whether the interest on a Home Equity Line of credit taken out on a Rental Property would continue to be deductible in 2018 under the new law.  It's not about Mortgage Interest or about 2017. Could you please clarify the answer and address the specific question about HELOCs in 2018? Thank you.
Carl
Level 15

Will landlords be able to deduct the interest for home equity loans on their rental properties in 2018 with the new tax reform bill in effect?

If you used the proceeds of the HELOC for the rental, it's deductible. If you used it for non rental non business purposes, it's deductibility is limited or not allowed at all - depending on what the money was actually used for.
victropolis
New Member

Will landlords be able to deduct the interest for home equity loans on their rental properties in 2018 with the new tax reform bill in effect?

Say I use the LOC to transact in other real estate or to put into my brokerage account.  Would it be deductible?  I'd guess yes, but who the heck knows.
Carl
Level 15

Will landlords be able to deduct the interest for home equity loans on their rental properties in 2018 with the new tax reform bill in effect?

If the borrowed money is not used for a qualified business transaction (such as purchasing rental property) then the interest is not a deductible business expense. It may qualify to be deductible in other ways. But not as a business expense.
domainxh
New Member

Will landlords be able to deduct the interest for home equity loans on their rental properties in 2018 with the new tax reform bill in effect?

Just to clarify, if I take a home equity loan or refinance my PRIMARY residence and use that money towards acquiring a rental property. The interest would be tax-deductible as a business expense? Please advise.

eddie201
New Member

Will landlords be able to deduct the interest for home equity loans on their rental properties in 2018 with the new tax reform bill in effect?

I have the same question.  Anybody have an answer?

Anonymous
Not applicable

Will landlords be able to deduct the interest for home equity loans on their rental properties in 2018 with the new tax reform bill in effect?

there are tracing rules.  if you follow the Regs 1.163-8T and 10T.   then it depends what you use the HELOC  for.   put it into a brokerage account and it's investment interest  (schedule a) and therefore the deduction would be limited to investment income.  use it to buy a recreational boat  (not for profit) it isn't deductible at all.  

 

you might even want to read this about HELOC

 

https://content.govdelivery.com/accounts/USIRS/bulletins/1dca891

(IR-2018-32)

especially example 1 

 

 

 

tax simplification at its finest

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