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Mortgage Interest Question

February 02, 2017 • Marco Scalco • Log In to Post Comments

My client is thinking of refinancing his primary home, pulling out $400k and using the money to put as a down payment on a new house. The client will then make the new house his primary home and rent out the previous home. IRC 163(h)(3)(B) states that the loan has to be secured by the residence in order to be deductible as acquisition indebteness. Will the $400K be deductible as acquisition indebtness? Any thoughts on the best way to handle this situation?



Yes, as long as the loan is secured by either the primary residence or the second residence at the time the debt is taken out, then it is deductible.


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