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No. of Recommendations: 3
You need to be aware that you cannot deduct the interest payments on a cash-out loan for a rental property unless the cash is spent on the property that secures the loan.

I think you're mixing up the personal residence rules with rental properties. You can deduct any loan interest on a rental property - secured by that property or not - as long as you can trace the loan proceeds to use on the rental. So a loan secured by one rental could easily be deducted as an expense of a different rental as long as that is where the loan proceeds were used. Even a loan secured by your residence could be deducted as a rental expense if that is where the proceeds were used.

--Peter
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