Hello ,

I interested in investing my HELOC into rental property .
Does it make sense regarding tax didaction ?

Thanks ,

Oleg

Zip Code: 92103

With your HELOC, there are a few different ways that you can claim a tax deduction.

The rules allow you to deduct interest paid on the first $100k of HELOC debt as an itemized deduction on your Schedule A along with the interest paid on your mortgage for your primary residence and vacation home.

A second option is to "trace" how you spent the proceeds of your HELOC, and then claim the interest paid in connection with that activity. So if you use your HELOC money as a down payment to purchase a rental property, you can choose to claim that interest against your rental income on the Schedule E.

Which method will work out better for you depends on your specific situation.

Zip Code: cpa@mdtaxes.com