Make Personal Interest Deductible Using Equity Loan
Interest paid on a mortgage, home equity loan, or credit card related to rental activity is fully deductible in the year that the interest is paid, but any other general credit card interest is never deductible. For that reason, using an equity loan to fund your purchases may be more beneficial.
Say for example you want to buy a car. If you use your credit card you will not be able to write-off the interest, but if you decided to take out an equity loan to fund the purchase, not only would you qualify for better rates, but you would be able to fully deduct the cost of interest paid towards the car. In essence, writing off the interest on equity loans is like making credit card interest deductible, especially since it doesn’t matter what the equity loan is used for.
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