Re: How do I deduct this interest? - Posted by Chris in FL
Posted by Chris in FL on March 29, 2006 at 12:34:09:
Chris, I do my own taxes (with CPA guidance), and I believe all that the IRS stipulates is that you have a verifiable trail that the funds were used 100% for the business. If both houses are Schedule E rentals, your tax burden would be unaffected regardless which house you attach the interest expense to, so you are not trying to avoid taxation. However, from experience, it is probably simpler and cleaner to attach it to the house it is secured by (house A). I have multiple properties and HELs, and many times I pulled money out of a property to have cash to buy other property with, and it could get very confusing keeping up with which HELs are attached to which property (for expense purposes), were they not attached to the property they were secured by. Good luck, I hope this helps, and please do verify with a professional tax advisor.
P.S. - every time I do this, I have my HEL check cut directly to the title agency for my new purchase - they can’t argue with my “verifiable trail”.