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I plan to obtain a refinance cash out on my primary home of $300K and use the proceeds as a down payment on a rental investment property. I have been advised by a mortgage broker that the interest rates are lower if I used my primary home, instead of borrowing on the investment property. My home is fully paid for.
I have received mixed advice from my broker and CPA. My CPA says that only the interest expense of $100K of the $300K would qualify as being deductable on my schedule A and the remaining interest on $200K could be taken as a deduction on schedule E. My broker says all the interest would be deductable on my schedule A.
My question is who is right or does it make a difference? Thanks for your advice.
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