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Level 4
July 29, 2020

consolidating business and personal debt by refinancing using personal residence

  • July 29, 2020
  • 1 reply
  • 7 views

Hi 

I have a client who asked if he should refinance his house to pay off the line of credit and a mortgage for his business building.  

He has an LOC  and a first mortgage on this building where his business sits.

Questions:

1.  Is this allowed?  

2.  Would he be limited to interest deduction of up to $750K of mortgage balance if he decides to refinance?  The properties (home and business building) were purchased before the 2017 tax law change.  

Thank you

 

 

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    1 reply

    sjrcpa
    Level 15
    July 30, 2020

    You can refinance your house and use the money for whatever you want.

    He's not going to get the $750K limit for home mortgage because it won't be used to buy, build, or improve his principal residence.

     

    The more I know the more I don’t know.