That is pretty much what I thought. Thank for your response.
I think I will consult with a local accountant. This is a
Condo right on the water that I believe I could rent. I am
now wondering if I rent it a few weeks in the Summer how
that would change things.

Thanks again,
Mitchell

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First, if you refi the rental, whether the interest is
deductible or not depends on what the proceeds are used for.
Interest on the part used to payoff the existing mortgage
would be deductible as mortgage interest on the rental and
the part used to pay personal bills would be nondeductible.

The part used to buy the vacation home would be deductible
except that qualified residence interest must be secured by
the residence. Since it wouldn't be secured by the vacation
home, I don't think the interest on that portion would be
deductible.

By refinancing your primary residence, all of the interest
should be deductible on Sch A as long as you don't borrow
more than the FMV of your residence. The part of the new
loan used to payoff the existing mortgage would be
considered "aquisition indebtedness" and the rest would be
considered "home equity indebtedness".

If you plan to rent out the vacation home at all, you should
consult a tax preparer as that could change the whole
scenario.

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I was wondering from a Tax Standpoint the best way to
finance a Vacation Home. I own a home worth approx. $85,000
with $27,000 left on the Mortgage. I have a Rent House worth
approx. $80,000 with $12,000 left on the Mortgage. I want to
purchase a $70,000 Vacation home. There is no way to borrow
$50,000 on the Rent House (purpose is to pay off the First,
a couple of personal Bills and put $20,000 down on the
Vacation Home) and have it be deductible? Would my best bet
from a tax stand point be to refinance my primary residence?
I do not want to do this. The Rent house shows a profit now
as I have few deductions.While I realize this is a good
thing, showing a profit, do I have any options to borrow
against it and make it deducible? Thanks for any advice.
Mitchell

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