Election to treat home loan as not secured by by the residence

[sami]

I have a client who refinanced the main home in 2019 and took some additional cash out to make major improvements to her rental property. Can she deduct the portion of that interest paid against her rental property on Schedule E as it is not deducted on Schedule A as funds were not used for her primary residence?

I am confused if an election 1.163-10T needs to be filed? I couldn't find an answer on IRS website nor in taxbook.

[rbynaker]

I don't think an election is required. See this from the Chief Counsel:

https://www.irs.gov/pub/irs-wd/1201017.pdf

Rick

[sami]

Thanks for the reply but that link is no longer available. If this election is not needed, I was just wondering when is this election used?

[rbynaker]

Thanks for the reply but that link is no longer available. If this election is not needed, I was just wondering when is this election used?

Fixed, sorry.

With home equity debt limited to $0, I think the 10-T election is basically dead. In the past, you could take out a $100K HELOC and use it to buy business equipment, then 10-T it to treat the interest as a business expense.

Rick