Interest On Home Equity Loan Deductible For Rental Property?

Q: If I take out a home equity loan and use the proceeds to buy rental income property, is the interest on my home equity loan deductible as a business expense of the rental property?

A: Unfortunately, I don’t think you can write off the interest you pay on the home equity loan as a rental property expense.

However, you might want to use the home equity loan to purchase the property and then take out a home equity on the business property. Once you have a loan that is tied directly to the rental property, you can write off the interest and any costs associated with getting the property.

For more information on the tax implications of rental property, try Vern Hoven’s Book, “The Real Estate Investor’s Tax Guide.”


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