Cash out Primary residence and Payoff rental

[Preddy Skotha]

Hello - I am a newbie here..

i am trying to refinance my primary home and the lender offered to cash out and payoff my rental property.  Below are current mortgage and refi details

primary home - 15 year/3% fixed / still 12.5 years left / 310k outstanding

rental - 30 year / 4.375 fixed / still 29 years left / 175k outstanding

refinance primary residence - 15 year/ 2.875 fixed / 485k loan / payoff rental

the idea to payoff rental sounds exciting..but I am worried about the taxation..is it possible to deduct interest payments (approx 35%) when I file taxes in 2021?

please advise

[Bill B.]

My pretty aggressive cpa shot this idea down as I don’t declare my primary home interest (it’s less than the standard married deduction.) if this was argued/allowed you could declare any loan on your primary was really on a rental. (I wanted to lower the rate and the number of loans.)

Get your cpa on board and I think you’re golden. Otherwise let it go. You could get a better rate on your rental by converting it to a 15 year if you’re comfortable with the payment.