rental property cash out

[Sun Chen]

if the rental property is no debt, and get a cash out refinance, the interest I paid on the cash out refinance, is it tax deductible on this property ?  CPA said the cash out is tax deductible if the cash I get is use it for other rental property.  Can I classify this cash out as return capital to myself ?  and still deduct interest on Schedules on this property.  I cash I get from cash out I will use to wait for buying other property when I find one or invest in stock, bond.

[Jonathan Pavkov]

Hi @Sun Chen - Any interest you pay on a rental property that is paying down debt on a lien (i.e. a mortgage) is a reduction in your income on your tax (Schedule E). It is considered an expense.