New tax laws on deducting home interest CPA advice

[Guy Yoes]

Hoping a RE CPA can help answer this question. I have my SFRs in an LLC. but not in a "company" as I don't qualify as a RE Pro. Currently, our rental income is counted as passive income and flows into our regular (w2)) income and(claimed on schedule E). In past, we used a HELOC to buy, rehab and maintain our SFRs. We could take the interest as a deduction.

From recent articles on the new tax laws, this interest would not be allowed in 2018 as it is not "tied" to the rental property. Is this still allowed if I show the HELOC funds were used on the rental property? What if I took out a HELOC Line of credit and then "loaned " it to the LLC (with appropriate paperwork) which would pay back the loan with interest. Would that be a Red Flag?

I can pull 150K in equity from my properties via a commercial loan but it has higher interest rates, $2000.00 in fees and 4-6 weeks processing time. I could use some interested to offset the income from the rentals, but I don't want to pay more interest than necessary as it effects the bottom line.

thanks for any comments or suggestions! 

[Natalie Kolodij]

@Guy Yoes 

HELOC interest will no longer be deductible on new or preexisting loans if used to....pay debt, buy jet skis, ect it's gone.

It is still 100% deductible IF: 

• Used to improve your primary home, IRS considered it part of the acquisition debt on the property and then as long as your total mortgage debt isn't over $750k- it's allowable. 
• Used to purchase an investment property via interest tracing rules. 

Feel Free to reach out with any other questions.