Mortgage Interest Tax Deductible (you get tax refund on your mortgage interest)

[lucy16076]

Question from a newbie landlord.... I bought a home & moved from my home in November. I took money from that home's equity & bought my new home. I now rent my first home.
Is the interest on ONLY the equity money I borrowed tax deductible, or is the entire mortgage interest tax deductible?
I hope I made that clear ... As mud!! Any thoughts?
Also my lender had ME pay $250 for a home valuation but when I asked for a copy to put in my files, they said'no.'. Do I need to pay another $250 to have one for my files or should I fight for the one I already paid for? Is this the same as the assessment I need after converting my home to a rental?

[Woofy]

Question from a newbie landlord.... I bought a home & moved from my home in November. I took money from that home's equity & bought my new home. I now rent my first home.
Is the interest on ONLY the equity money I borrowed tax deductible, or is the entire mortgage interest tax deductible?
I hope I made that clear ... As mud!! Any thoughts?
Also my lender had ME pay $250 for a home valuation but when I asked for a copy to put in my files, they said'no.'. Do I need to pay another $250 to have one for my files or should I fight for the one I already paid for? Is this the same as the assessment I need after converting my home to a rental?

Hiya.

Try to ask nicely for the one that you already paid for. I established a very good relationship with my mortgage broker, and he always send me the appraisal report. He tells me that he is not supposed to, and I always tell him that I appreciate him giving me the report. It helps that I do send referrals his way too... Hopefully, you will be able to get the report. It contains quite useful information.

As for your other questions, I think you first have to establish which one is your primary residence now. This is very important in CRA's eyes, as capital gains from primary residence are generally not taxable (not quite sure if there is a limit to the capital gains before taxes are triggered.)

Generally, you can deduct all the interest on money you borrow to invest in income earning assets. The onus is on you to prove to CRA that your borrowed funds is indeed used to buy income earning assets, and you have the corresponding earned income reported in your tax return too.

Your case is a little grey, because you borrowed against your primary residence to buy your new primary residence. My gut tells me that yes, the interest is deductible, but you should check with an accountant.

Again, I think you need to establish clearly your primary residence, so as not to trigger any taxation headaches in the future when you sell either of the houses.

P/S: I am not an accountant or financial advisor. I am merely sharing my opinions based on my knowledge as a real estate investor. Please do consult with an accountant for accurate advice.

Hope this helps.

[lucy16076]

Thanks for your help I have given up on receiving a copy of my home valuation from the bank as I dealt with PCF & they are basically "virtual" with no chance to develop a good rapport.
My primary residence is my new current home. I think that for this year 2014, I will be in the market for a great accountant that can answer all my questions as they arise. I'm sure I'm missing some things, despite my reading & asking around for answers.
Thanks again Woofy!

[blueeyetea]

Is the interest on ONLY the equity money I borrowed tax deductible, or is the entire mortgage interest tax deductible?

If I have this straight, you borrowed money on the first house to buy the second house, which you now live in. Then no, I don't think you can deduct any mortgage interest, since you used the money to fund your primary home, and not the other way around.

It's unclear from your note if the mortgage on the first house is paid off. If not, then yes, the interest on that mortgage payment is now deductible.

[lucy16076]

I did borrow from the equity of my first home to purchase my current home, now my principle residence. I rent my first home out.
Both homes have a mortgage on them. Borrowed $80K from first home to buy second home.
I understand now that the mortgage on my first home (my now rental) is tax deductible this year.