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is it better to do a cash out refi of primary home to pay off investment property

Is it better to do a cash out refi of primary home to pay off an investment property.
 The investment property is being rent out. Are there any tax advantages of either scenerio?
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April 30 2013 - San Francisco
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The refi rate on primary property is better than for investment property. If a rental property is fully paid off and collecting income, are there any allowable writeoff for it, like insurance, maintaince , improvements, etc...?
There is no mortage deduction for investment properties?
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April 30 2013
What you need to consider is:
 1.Interest rate on Primary
2.Interest rate on Investment
3. Refi fees

By pulling equity out of primary to pay off investment is a good idea if you pay a much higher rate on the investment loan and dont get to write it off. Essentially transfering the interest expenses over to your primary.

You need to also consider if the added tax benefits of paying more interest on the primary and thus reducing your income taxes over the life of the mortgage compensates for the refi fees added into the loan or due upfront.
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April 30 2013
Brian, The IRS only allows a mortgage interest deduction on a primary or qualified secondary residence up to $1M in combined liens plus $100,000. Mortgage interest is not deductible on a rental property.
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April 30 2013
The only tax advantage I can think of is to get a Home Equity Line of Credit to pay off your rental. You'll be able to,deduct up to $100,000 of that mortgage interest. You will not be able to gain a tax advantage by refinancing the cash out of your primary since the IRS only allows a mortgage interest deduction on acquisition indebtedness, or, the original loan amount you used to purchase your home. A CPA may have some other thoughts for you.
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April 30 2013
interest rate is going to be better with the primary residence.

im not a tax expert but right off the bat i can think of the drawback of not having the mortgage interest to write off on your Schedule E if the investment is paid off.
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April 30 2013
 
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