Conert Personal Residence to rental-mortgage interest

[bruehaus]

What happens to the deductible mortgage interest if you convert a personal residence to a rental? Specifically, I have a $2million mortage whereby the interest is limited by the $1m/$100K rules. Does all of the interest become deductible if I convert this home to a rental?

[Bees Knees]

Assuming the entire mortgage can be traced to the acquisition or improvement of the property, it all becomes deductible on Schedule E when the house is converted to rental use. The $1 million debt limit that applies to qualified home mortgage interest does not apply to business interest expense.

Of course if any of the debt is traced to home equity debt used to buy a car or other personal items, that portion of the interest expense would not be deductible on Schedule E.