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Close. You have the rental interest correct.

For the personal mortgage and HELOC interest you have to ignore the rental property and any principal borrowed to finance it. You can deduct the interest on an additional $100K of HELOC principal beyond the amount borrowed for the rental. This $100K of principal will be reduced if you've already refinanced your primary mortgage and taken additional cash out.

I think I'm finally getting it. If I read you correctly, I need to view and treat this as two separate loans, rental business and personal. Interest related to rental is deducted on Sch.E. Interest related to personal use is deducted on Sch A (unlikely because standard deduction will be greater than itemized deductions).

Thanks for your patience and explanation!

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