Is primary residence HELOC interest tax deductible?

[Kin Meng Sio]

Hi,

I live in Washington state and I have an in-state 4-plex currently under contract with conventional financing. I plan to use one of the following options to partially fund my down payment + closing cost:

1. HELOC from my primary residence

2. 401K loan

I'll be paying back to either loan in couple of months. I'm debating which fund I should use in terms of tax efficiency + opportunity cost. Couple thoughts:

1. If I take money out from 401K, i lose some compound interest until I pay back. 

2. I'm using after-tax $$$ to pay back the 401K + interest. 

3. However, I'm paying back to myself with the interest rate. 

4. HELOC interest is lower and is interest-only payment, so I have more flexibility on my personal cash flow.

5. Not sure if HELOC interest in this case is tax deductible or not. It's a primary residence HELOC but it's paying against a investment property.

Any advice? I'm searching on Google regarding HELOC interest tax deduction but I haven't found anything specific to my case yet.

[Kevin Romines]

You can still deduct HELOC interest from your primary so long as it was used to invest or to buy or use on an investment property. The link above, doesn't tell the whole story. Read this link as well.

https://finance.zacks.com/deduct-interest-equity-line-investment-property-8342.html