# what's the best way to finance a second house......



## thepitchedlink (Feb 17, 2014)

OK, I want to move....not sure I will be able to sell my place for near what I payed for it...bought about 6 years ago. Not sure I want to sell it, might like to keep it and rent it out
Anyway, it's payed for. I have some cash kicking around. What options are out there to buy a second place? 
I'm interested in HELOC ideas, being able to write off any expenses/ interest. Any other places that I can look for information on ideas or strategies would be great
thanks


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## Underworld (Aug 26, 2009)

Bump. I'm also in this boat. But mine isn't paid off yet


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## Just a Guy (Mar 27, 2012)

You could get a regular mortgage on it.

A HELOC on your old place allows you to make a cash offer on your new one, that may give you some bargaining power.

As for writing off the interest, that won't happen as the money needs to be used for investment purposes, buying a personal residence doesn't count.

Also not all helocs, or mortgages for that matter, are created equal. So, it's good to know the product.

As for renting out your old place...it depends on what it's worth. You may be better off selling it and buying something more rental appropriate.

Personally, I'd never rent a former home...too many emotional attachments, especially when the place gets trashed.


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## hystat (Jun 18, 2010)

if you got a HELOC on the old place and then rented the old place, the old place just became an investment property imo. I think you could write the HELOC interest off.


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## Just a Guy (Mar 27, 2012)

I believe the government doesn't agree...there is a convoluted process you have to go through to "sell" the property back to yourself...

It's stupid, but that's what government is about.


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## thepitchedlink (Feb 17, 2014)

hystat said:


> if you got a HELOC on the old place and then rented the old place, the old place just became an investment property imo. I think you could write the HELOC interest off.


this was my original line of thinking.....turn it into an investment and be able to write off some interest


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## FrugalTrader (Oct 13, 2008)

If you get a HELOC on the old place and use the HELOC proceeds to buy the new place (used for personal purposes), then the HELOC interest would NOT be tax deductible (even if you convert your old place into a rental).


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## nobleea (Oct 11, 2013)

Tax deductibility is based on what the funds were USED for. Not what they were loaned against.


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## thepitchedlink (Feb 17, 2014)

right. so I could get a HELOC and buy more ETF's, but not a rental....odd. then I would be able deduct the LOC interest ?


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## FrugalTrader (Oct 13, 2008)

If you used the HELOC proceeds to buy a rental, then sure, the interest is tax deductible. However, in this case, you are using the HELOC to buy another principal residence. Unless I'm misunderstanding your situation.


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