refinancing rental property

[oceanlovin'ea]

Can anyone tell me where to look to find the details on refinancing rental property?

Client I inherited refinanced his rental house in 2006. But he is using some of the money for personal use, like paying off his truck.

At EA seminar this summer, this topic was discussed and I know that this is not allowed and changes the characteristic of the mortgage interest. But I need to find this discussed so I can tell him and know how to do the schedule E.

Thanks for your help.

Linda

[solomon]

http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=0077cada3f43c7b797a2e21240ca526f&rgn=div8&view=text&node=26:2.0.1.1.1.0.8.288&idno=26

[Barnett]

Re: Mortgage Interest

Can;t tell you where to find the discussion , but the subject is not new , The expense should be allocated between private and rental useage , Maybe if you look up the IRS site on rental/mortgage expense.
Explain the allocation and the percentage used in separate notes where the taxpayer will have signed and confirmed.

[Luis Mopeo]

Can anyone tell me where to look to find the details on refinancing rental property?

Client I inherited refinanced his rental house in 2006. But he is using some of the money for personal use, like paying off his truck.

At EA seminar this summer, this topic was discussed and I know that this is not allowed and changes the characteristic of the mortgage interest. But I need to find this discussed so I can tell him and know how to do the schedule E.

Thanks for your help.

Linda

Go to TTB page 4-14, Interest Tracing Rules. There's an example that fits you situation.

[oceanlovin'ea]

I'm redfaced

right now.

I guess so much has been going on, I didn't even think to look in the Tax Book. I should have looked there first.

Thanks.

Linda

[DTS]

Refi

Linda,

Take a look at some past discussions on this and see if any of it will help you.

http://www.thetaxbook.com/forums/showthread.php?t=5255

http://www.thetaxbook.com/forums/showthread.php?t=1892&highlight=mortgage+tracing+rules

http://www.thetaxbook.com/forums/showthread.php?t=1671&highlight=mortgage+tracing+rules

Hope you can find something here!

Dennis