rental property interest expense

[Anonymous]

we bought our first rental property, and trying to get it paid off as quickly as possible. down the road, if we get it paid off and then take out a home equity loan (or another mortgage) on it, will we be able to deduct that interest expense?

[strongmommy]

Hi there,

Quick answer is NO ... unless your using the LOC to fund repairs/reno's to the rental. Leveraging the property to fund other activity isn't a deductible cost of earning that stream of income.

If your using the LOC to fund investments in non-registered accounts (not an RRSP or TFSA or RESP) then you can deduct the interest against that investment income.

Let me know if you want more info ...

thanks