The deduction is optimized as values increase and can potentially offset the entire net investment (including down payment) for high wage earners.

I've had some not happy when I have asked them to split it out.I've tried asking questions to the IRS customer service reps, and didn't have the best luck.While I cannot cite a specific official guidance on this issue, I consider debit cards exempt.

My main question is whether it makes more sense to go the seller financing route and pay off the principal in 8–10 years or stick with a standard 30-year loan.My thinking is that the tax deductions from a mortgage wouldn’t outweigh the potential equity I could gain over those 8–10 years.

They collect EMD from multiple potential buyers - then transferred the EMD into an interpleader accounts in hopes of absconding with all the EMD. 

OR potentially a lease to own option.

The seller said this is in a gentrified area so there's potential to rehab this effectively and get a high payout as shown in the last comp.

@Brooke Carlton I found a potential solution to this problem!

Keep track of 3 buckets.1) Owner occupied portion - potential deductions for schedule A2) Tenant occupied portion - potential deductions for schedule E3) Jointly occupied portion - likely prorated for both schedules.There are nuances to this, so I recommend looking for a tax pro who can coach you on this. 

You can often get better rates with a national lender, but the customer service is non-existent, communication probably sucks, they may ask for the same documents multiple times, etc.

If you currently rent for $2,500 and take the $1,750; you have additional positive cash flow of $750 for your rent situation.Have you thoroughly looked over the capex potential issues?