Rental gives $500 monthly income from $2,000 rent.

You mentioned W-2 income as part of a way to save on taxes. 

Interest income is interest income, unless you decided to roll some of the current cash into a self directed IRA at which point your interest income would be deferred for a later time and allow your funds to grow tax free.

There are plenty of banks across the US that also have a stated income heloc (in the Carolinas, First Citizens will do up to $100k with no income verification). 

The absolute best way to avoid taxes is not earn income.  

Being a real estate professional allows you to treat the income as non-passive, allowing higher high income tax payers to pay less in taxes.

No personal income or tax returns are required.

$1 lent for $10 of income? 

@Victor Yang To use the rental losses to offset any active income (W2), you'd have meet Real Estate Professional status (which would be difficult to do with a W2 job because you'd have to work more on real estate than any other job to qualify) OR have an AGI of $150K or less.

I  Income:  The amount of property you can buy will be dependent on your Debt to Income ratio.