Date: 1 Sep 2010
Subject: Interest Tracing rule
We bought a primary residence house A in 1999 for $335,000, with a mortgage of $268,000.
The $268,000 mortgage was paid off in 2005.
In 2009, we borrowed $400,000 as a mortgage against house A to buy our new primary residence, house B. We had two loans, $400,000 on house A and $410,000 on house B. The reason was the $400,000 was a conforming loan with a much better interest rate than a jumbo loan for $810,000.
When we moved to house B, house A was converted to a rental property.
Is the interest for the $400,000 loan on house A tax deductible?
Thank s in advance.
Date: 8 Sep 2010
If you refinance house B to wrap in the financing now secured by house A, the interest on the new loan will be tax deductible.
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