In 2008 I paid off my primary residence and a second home that I own and use as a rental.

I then borrowed 195k against my primary home and used the money to buy house 3 and use house 3 as a rental.

So I own both rentals free and clear, and have a mortgage on my primary.

When my daughter started college in 2012 I borrowed 80k against House 3 to cover her tuition for four years.

So now, on my house that I live in I owe 168k @4.75 apr. (Money was used to purchase House 3) Still owe 22 more years.

On House 3 I owe 68k @ 4.25APR. (Money was used for daughters college.) My daughter and I are doubling up on payments and should have it paid off in 8 years.

House 2, rental, own free and clear.

In the past I was able to write off the interest on Primary house against income from house 3 because 100% of the money borrowed against house 1 was used to purchase house 3. So I could write off mortgage interest against rentals, and still take the standard deduction.

My tax preparer called me today and said that after this year, I would no longer be able to write off the interest because that was being stopped in the new tax law. She said I would have to take out a mortgage against house 3 if I wanted to write off that interest.

House 3 will appraise at somewhere around 175k. I could borrow 80% of that so 140k. They would make me satisfy the 68k for my daughters education, so in effect, I would only get back 72k. That remaining 72k would be used to pay down my primary house to 96k.

If I did that, I would owe the following:

Principal home -> owe 96k

House 3 -> owe 140k

House 2 -> own free and clear.

In 2017 I paid 7500 in interest on the house. So I would be spending 5k in costs to get to write off the 7500 for interest.

I could take a loan out on House 2 and probably get 96k to totally pay off Primary Home, but that additional loan would most likely cost 5k in fees as well. Thus I would have close to 10k in just loan costs.

On the plus side, all interest being paid by me would be against rental income, and my wife and I could still take the standard deduction of 24k a year.

Any idea on how long it would take me to break even on the loan costs?

The interest paid on the loan used to purchase the rental is still deductible.

Not sure about the one used to pay for the tuition. But if it was before it might still be too as the law applies to new equity loans. Old ones I believe may be grandfathered. But this could be wrong.

But for sure the one used to purchase the rental is still deductible as an interest expense on your schedule E.

Thanks Lisa...Im going to wait to see what happens.

Julie...True, I am spending 7500 to get 1875 in taxes. But it is the rentors money I am spending, not my own. I would be spending 5k in closing costs to get 1875 back in taxes so in three years, the closing was paid for.

Lisa has it right. Mortgage used to buy rental is still deductible on Sch E and not limited.