Borrowing against rental to payoff primary home loan

Tax, SDIRAs & Cost Segregation
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Borrowing against rental to payoff primary home loan

Mark Navaro
Member since 2018 · 1 post · 0 votes

The 2018 Tax law discourages itemization by providing a bigger exemption and capping mortgage interest and SALT deductions. I have a rental that is fully paid off, but my primary residence carries a mortgage. 

If I borrow against the rental to pay off the primary home loan,  will the new interest on the rental be a justifiable business expense deduction?

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  • Matt LeonardPro Member
    Londonderry, NH · Member since 2015 · 98 posts · 89 votes
    7y

    How much are your SALT taxes currently?  Unless you have a lot of other deductions to get over the standard deduction of 12k single and 24k married, then it wouldn't be worth the effort.  Better question is why don't you refinance that investment property so you can acquire more income producing properties?

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  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    7y
    Originally posted by @Mark Navaro:

    The 2018 Tax law discourages itemization by providing a bigger exemption and capping mortgage interest and SALT deductions. I have a rental that is fully paid off, but my primary residence carries a mortgage. 

    If I borrow against the rental to pay off the primary home loan,  will the new interest on the rental be a justifiable business expense deduction?

    No, it will not be deductible. Your primary residence is personal asset, not investment or business. 

    Also your mortgage interest rate for  your rental will be a lot higher than your primary residence, so it will not make sense, something even with the tax deduction. 

    Also, will you itemize going forward even with 24k standard deduction ? If not, it doesn’t make sense against 

    [email protected]941-914-7779
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  • Carl FischerPro Member
    Rental Property Investor · Ambler, PA · Member since 2015 · 2k+ posts · 1k+ votes
    7y

    @Mark Navaro

    Use @Ashish Acharya or your cpa. You need a professional who knows your particular situation and goals for the best answer. 

    [email protected]215-283-2868
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