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There is no upper dollar limit on the amount of mortgage interest you can deduct on rental property, as there is with home mortgage interest.
Furthermore, you can deduct almost any type of interest you pay when you borrow money to further your rental activity, such as interest on a revolving charge account or even credit card late fees.
The loan need not be secured by the property, but you must be liable for repayment, and the proceeds of the loan must be used for the rental activities. If you don't use the money immediately to pay for a particular expense (such as to buy or improve the property) you must keep records showing where the loan money went.
Unlike other types of investment interest, interest on loans pertaining to rental real estate activities in which you actively participate is not limited by the amount of income you receive from the activity.
However, you can't deduct prepaid interest, and there is no exception for points paid to obtain a mortgage on a rental property as there is with home mortgage loans. Consequently, points you pay to obtain a mortgage for commercial or residential property must be spread over the life of the loan, and deducted in equal amounts over the entire period.
Fees and charges you pay to obtain a mortgage on rental real estate, such as application fees, appraisals, abstract fees, recording fees, cannot be deducted as interest but can be amortized (deducted evenly) over the life of the mortgage.