Two questions:Would this purchase be considered a "second home" (for tax/mortgage purposes) even though I don't own my primary residence? 

My wife and I are real estate newbies, but have been investing in more "traditional" investment vehicles for several years now.

The property is occupied (would likely try to have it delivered vacant) and I would put down 5% which is the most I could afford and pretty much the lowest traditional mortgage would allow.

Does anyone know if I take out a HELOC on my primary residence and draw funds to purchase/improve rental property (1) will the interest be deductible? 

Would love to hear others experiences/opinions on working on REI deals with family members.I'm inclined to fund her purchase because it means *much* less money upfront and quicker entry into REI -- the income is an added bonus, but for my first purchase, the learning experience is my primary motive.

Tax assessor values are traditionally low, and irrelevant.

I’m not sure i see the benefit to the second option as then i have to pay taxes on this rental income and then i believe it does not look like my primary residence anymore.

I then refinanced my primary mortgage (in NY) with a cash out, and paid off the HELOC last month.

The main problem is PenFed allows applicants to own only three total properties (including primary) to qualify. 

I'm expecting my 2nd little boy anyday and traditionally landlording has been more hands off than vacation renting landlording!