Author: Phil MartiPhil Marti Date: Feb 19, 2007 01:08
"olivia" gmail.com> wrote:
> Scott: Regarding your advise related to investments.... I am not sure
> if I completely understand. Say, I have 10K in other investment
> vehicles (stocks/mutual-funds) right now and I sell them. And then
> borrow 10K from my mortgage loan from the investment property and use
> that to investment in stocks/mutual-funds. Can this 10K be subtracted
> from the rental income when calculating the taxable income? Or just
> the loan interest pertaining to 10K loan amount can be used to offset
> rental income?
Neither. If you use borrowed funds to invest, let's say in stock, the
interest you pay is investment interest, deductible within limits on
Schedule A. Interest you pay on a mortgage on your rental property is
deductible on Schedule E only if the proceeds of the loan are used on the
rental.
If you have debt you want to pay off and have equity in your home, you may
want to consider a home equity loan. See IRS Publication 936 for the
details on what kind of personal residence mortgage interest is deductible
on Schedule A.
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