Second home HELOC v. primary home HELOC

[Daniel Alvarez]

Hello BP community. Some background on the question first. I've recently closed on a beautiful second home on the beach using 10% down with a piggyback structure to get low rates, avoid PMI and increase return out per dollar in. Funding looks like this:

• 10% down
• Conventional loan, up to limit ($510k) 
• HELOC for the balance (~200k)

Property is expected to cash flow from short term rentals. I understand the interest on both loans is tax deductible (business expense) -although I'm guessing just for the period of time it's rented out (this is not the main question although also an interesting topic). As next step I'm now looking for ways to reduce the cost of the HELOC, which is currently at 6%. Primary mortgage is at 2.75%.

With the recent hot market my primary home has appreciated to a point I might be able to take a HELOC at 3% or less. On the surface quick math would suggest I could halve my HELOC costs by taking out a new one to pay off the existing one, or effectively "swapping" the collateral property from second to primary...

Question is, would the costs on the new HELOC on my primary home be considered tax deductible, as it would be used in the business. Also, would you do it?

Thanks so much!