interest tracing rules- borrowed mortage funds form primary house to pay off rental property debt

Forum|Forum|6 months ago
January 1, 2026
4 replies
17 views

I like to know if mortage interest is deducted ( on schedule E) if client refinances a primary residence to pay off a rental property mortage $400,000- original purchase price?

Does the tracing rule apply? do you need to make an official 10-T election

I heard the The 10-T election should be physically attached to the taxpayer's return and applies to the interest paid on that debt for the current and future years. How do you make election using proseries.

Thanks,

John

ProSeries Basic

Skylane

Intuit Community Champion

IMO, the refi interest allocated to the rental property can be deducted on sch e and that tracing rules apply. Be sure to document. I don’t think 10-t is required but will let others weigh in.

If at first you don’t succeed…..find a workaround

Accountant-Man

Level 13

If it's in there, and if it's needed, there is a separate set of forms under "Federal Election" in the All Forms menu.

** I'm still a champion... of the world! Even without The Lounge.

JOHNNYCPAAuthor

Level 4

i use proseries baisc, I can not find the federal election form.

T

TaxGuyBill

Level 15

@JOHNNYCPA wrote:

if client refinances a primary residence to pay off a rental property mortage $400,000- original purchase price?

If I remember correctly ... is it a separate loan that was only for the rental payoff? Or does the loan combine their personal residence acquisition/improvement debt along with the new $400,000? Is their qualified personal Residence loan amount over $750,000?