Refi

[RLymanC]

Client lived a house A as primary residence. Client refinanced house A (now a rental unit) to buy new primary residence house B. Used refi money from house A as down payment on house B.

Am I correct in using original loan balance mortgage interest payed on house A as rental expense and the additional interest payed due to refi as personal interest.

[S T]

Refi

I believe your assumption is correct.

The original paid off portion of the mortgage on the refinance would stay with the now converted rental property.

The added amount on the refinance for the down payment on the new personal residence would not be deductible as mortgage interest, as the new personal residence is not securing the refinanced note.

Are there any improvement costs to the now converted rental property in the refinance that you can allocate to the converted rental?

Sandy

[RLymanC]

Thanks Sandy

No improvements prior to renting, I suggested he wait till after it was rented and use the rental income to make the minor repairs and new paint job . :>)