John the third
Confused about dryer sheets
Hi all,
I own an investment property which had a $129k mortgage on it at a 4.75% rate. In December, I refinanced the loan on my primary residence to get a 2.625% rate and was able to get cash-out proceeds of $129k which I used to pay off the debt on my investment property. After a little research, it seems I can only deduct as an itemized deduction that portion of interest on the new loan associated with the original loan balance, not the interest on the $129k additional loan balance. But my question is... since I used the $129k proceeds to pay off the debt on the investment property, can I deduct the interest associated with the $129k as a business expense on Schedule E? My gut tells me yes I can since I'll have clear documentation as to how the proceeds of my cash-out refinance were used. I believe the deduction is capped at my net taxable income on Schedule E. Just wondering if anyone has any advice on this situation. thanks in advance.
I own an investment property which had a $129k mortgage on it at a 4.75% rate. In December, I refinanced the loan on my primary residence to get a 2.625% rate and was able to get cash-out proceeds of $129k which I used to pay off the debt on my investment property. After a little research, it seems I can only deduct as an itemized deduction that portion of interest on the new loan associated with the original loan balance, not the interest on the $129k additional loan balance. But my question is... since I used the $129k proceeds to pay off the debt on the investment property, can I deduct the interest associated with the $129k as a business expense on Schedule E? My gut tells me yes I can since I'll have clear documentation as to how the proceeds of my cash-out refinance were used. I believe the deduction is capped at my net taxable income on Schedule E. Just wondering if anyone has any advice on this situation. thanks in advance.
