Q: If I take out a home equityYour share of ownership in a company. Stockholders are often referred to as equity investors, because they invest in the equity of a company. loanA Loan is an amount of money that is lent to a borrower, who agrees to repay it plus interestInterest is money charged for the use of borrowed funds. Usually expressed as an interest rate, it is the percentage of the total loan charged annually for the use of the funds.. 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 EstateReal Estate is land and anything permanently attached to it, such as buildings and improvements. Investor’s Tax Guide.”