Tracing Rules on Mixed Use Mortgage

[S T]

I have a t/p that has a mixed use mortgage - part for Personal non deductible Mortgage and part for a Rental ( she refinanced rental to buy a new personal residence)
Now the loan has a negative amortization - so how does that affect the interest deduction, do I allocate by percentage personal to rental or have all of the neg amortization allocated to personal?

Thanks

Sandy

[S T]

Anyone have any words of wisdom?

Thanks

Sandy

[JG EA]

Anyone have any words of wisdom?

Thanks

Sandy

I might if I knew what negative amortization was!

But repayment would be:

of a loan that was allocated to more than one expenditure is repaid, the loan is treated - for purposes of the repayment rules - as repaid in the following order:

amounts allocated to personal expenditures;

amounts allocated to investment expenditures and passive activity expenditures [other than passive activity expenditures described in (3) below];

amounts allocated to passive activity expenditures in connection with a rental real estate activity with respect to which the client actively participates;

amounts allocated to former passive activity expenditures; and

amounts allocated to trade or business expenditures and to expenditures for any low-income housing project in any taxable year in which any benefit is allowed with respect to such project.

Off internet somewhere.

Of course this is tracing passive stuff, but the idea is the same as when I did research for one of my clients - but I'm not at the office right now.

[S T]

Thanks JG,
It helps some.
Negative Amortization (probab ly an old terminology) - Deferred Interest on a loan modification - Lender is adding interest unpaid to the loan balance, so it is growing, growing, growing

Sandy