Posted on: 27th Mar, 2009 03:29 am
I've been living overseas for the last 6 years and have had my house rented-out during that time. I plan to buy a primary home soon. Instead of selling my rental property and having to pay a large capital gain tax on it (since it's become an investment property), it's suggested that I use HELOC to extract equity from my rental property as down payment for my primary home purchase. Can I claim tax deduction on the HELOC (the interests-paid) extracted from my rental property for home purchase? Thanks.
You should check with your accountant on that. On another note, if you have two loans on that property, it would make it more difficult for you to qualify for the loan on your new home. Make sure you speak with a loan officer regarding your entire plan to be sure that it will work.