Question by Charlene S: Can I give a loan to my LLC for a tax deduction?
I purchased income property and put it in a LLC. Instead of getting a mortgage for the income property, I refinanced my house, took out cash, and paid for the income property in cash. I sold the house I refinanced 2 months later. Can I show a personal loan to the LLC for the mortgage I had on my house, so I can deduct the interest on my tax return for the LLC since I used my personal funds to buy the LLC?
Answer by taxreff
If I’m following the events correctly, the answer is no. The loan was not secured by the property purchased.
You may still be able to take a deduction for interest paid on the loan (I’m assuming its paid off now). However, the deduction would be on Schedule A, and it would be subject to the home equity loan limitations. That is because the loan was secured by your personal residence.
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