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Buying a New Home |
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I want to buy a new home, but would like to retain my current home as a rental property. Can I borrow against the equity in my current residence to use as a down payment on a new home? I know I can't deduct the interest on a mortgage for a rental property, but am confident I can rent it for more than the monthly mortgage payments. I realize I would need to qualify for both mortgages. |
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You certainly can deduct the mortgage interest paid on a rental property. It's one of the expenses you subtract before calculating your taxable rental income. Sounds to me as if you should start by reading one or two basic books on real estate investment and Landlording.
If you have good credit and enough income, and if you have enough equity, you should be able to borrow against it for any use you want, including a down payment on your next home. Of course the additional debt will enter into the calculations for whether you qualify for yet another loan to buy the next property. But you will also receive credit, in those calculations, for rental income you may reasonably expect.
If you're going to be a real estate investor, you need your own accountant right from the start, and that's the person to help you figure out whether the whole thing makes sense financially. |
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Edith
Originally published on January 25, 2008 |
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