Combining 2 home equity loans – how to claim on taxes.?
Tags:home equity loan, home equity loans, home renovation, mortgage, rental expenses,
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I am deliberation mixing 2 home equity loans. At the impulse you can explain the seductiveness paid upon 1 of the loans as it was for home renovation, though not the other. you lease my residence out, as well as need to know if you will still be means to explain seductiveness for my taxes upon the $ used for strange home renovation.
We have been in the troops as well as stationed in Japan. We lease the residence out in FL. you took out the home equity loan when you initial changed in to the FL house, as well as since it was for renovations, you am means to explain this underneath the let expenses. The 2nd home equity loan was taken out to connect debt, as it is simpler to have the single remuneration whilst in Japan. We have equity in the residence still.
The reason you wish to connect is since you have been starting to be stationed in Virginia, as well as as you do not wish to sell the FL residence as well as do not similar to throwing income divided for lease you have been starting to try as well as buy the 2nd house. If you connect these 2 loans it would giveaway up an additional 0 the month to validate for an additional mortgage.
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Which property will secure the loan? HELOs are deductible (on Schedule A) on a principal or second residence if the amount of the proceeds are used for renovations, repairs or improvements, subject to the normal combined $1,000,000 loan limit. You may also deduct proceeds used for other purposes, up to$100,000 over and above the amount used for renovations, repairs or improvements, subject to the same $1,000,000 loan limit.
Loans secured by investment property are deductible (on Schedule E) for the purchase of the property or the improvement, renovatiom, repair, or maintenance of the property. To be deductible the interest expese must be a reasonable and necessary expense for the production of income. If you use the proceeds of a HELO secured by a rental property to buy a car for personal use, that’s not a business expense and would not be deductible.
If you secure the HELO with the rental property, limit the proceeds to the rental property improvements, etc. If you secure it with your personal residence you’ll have some wiggle room.
Hmmm…my question is why can’t you claim the other loan interest? Did it exceed the FMV (fair market value). I do know there are times when you can’t claim the interest on a mortgage. But, they aren’t very common.
Generally, this would mean that you owe more on the house than it is worth…and someone gave you a loan for that amount…and you didn’t spend it on the house.
Which loan was first…the one that you can’t deduct or the one you spent on renovation?
It seems to me that this was mishandled to begin with. And, your question here even makes it apparent.
Without knowing the answers to my questions I can’t give you any advice.
Sorry I couldn’t help.