Three years ago, I refinanced my rental property, took out $60,000 of equity, and used the $60,000 for personal purposes. Since this loan is secured by my rental property, may I deduct the interest as rental property interest? (A.B., Millbury, MA)
No! You may not deduct the interest on the $60,000. The law contains tracing rules that require you to follow the money to its use. In your case, this is personal use. Thus, the $60,000 part ... Log in to view full article.