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Marc Brown
Sep 25, 1986, 11:44:51 PM9/25/86
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Suppose I own house A costing 100K with a 95K mortgage, and it is being
used as rental property. It is now worth 200K. I live in house B
costing 250K with a 225K mortgage (and worth 250K). For the purpose
of writing off the interest on our car and college loans,
I plan to take out a equity loan for 20K. However, because house B
has no equity to speak of, the loan is written against house A.
used as rental property. It is now worth 200K. I live in house B
costing 250K with a 225K mortgage (and worth 250K). For the purpose
of writing off the interest on our car and college loans,
I plan to take out a equity loan for 20K. However, because house B
has no equity to speak of, the loan is written against house A.
QUESTION 1: Does paying off a college loan count as "educational"?
If so, why should I need to go to the hassle of taking out a loan
against the house in the first place?
QUESTION 2: Supposing all 20K were used for the car loan (well, let's say
a car, a Cessna, and a month for eating for 2 in Paris), how much would
be writeoffable? Clearly 5K (or a bit more since the 100K house has
some "improvements"). Can the remaining 15K be used against the 25K
equity in house B (purchase price less mortgage)? Or would a second
loan against house B be needed? (This would be nearly impossible,
since the original mortgage is so close to the value.)
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