I now rent out the old house (with the HELOC) and the rent comfortably covers the HELOC/mortgage payments with money to spare.My question is whether I am allowed to deduct the HELOC interest alongside my new mortgage interest on the new house.

Hello @Michael Plaks and @Ashish Acharya, are you allowed to change/switch the category of your engagement to the property from Passive to Active participant in the future once you classify them when you acquired the property?

We just had a family gathering and did some fun stuff that week to keep the tenagers engaged.

Not sure how I, alongside many of my partners and fellow investors managed to do everything you said can't be done.

I am guessing traditional banks don't offer them alongside 20% down mortgages.

they will give you a free consult and maybe fire off a letter for a few hundred dollars but to engage they will ask for $5k retainer to start litigation.

Same for AppFolio from contact with them.In terms of Accounting, I honestly have read that many people continue to use Quickbooks for accounting alongside Buildium and AppFolio.  

Don;t even call them similarly because if a seller does land on your buyers site and sees that you are affiliated, you will lose credibility as an honest actual cash buyer, even IF you DO buy houses in cash (along side wholesaling).It is easier to talk about the good language then it is about the bad language,But this is what I would say.ALWAYS make sense.

Maybe it qualifies, maybe it doesn't.There is sufficient complexity here that a tax professional should be engaged to determine if you have substantial authority or reasonable basis to use the 121 exclusion based on the face value of the facts and the language of the code and regs.I wouldn't take a tax position here based on free advice... 

You can also reassure him that the review system will keep you engaged managing the property.