But they are borrowed monies to purchase so the interest will be deductible. And next tax returns it will be 100% again I think. For 2019 returns. If you borrow money to do renovations etc, also interest is allowed.I am not a tax expert but my understanding is that the borrowings must be an actual mortgage loan. Can you use credit card and C.U. loans?
Why not? Why would it matter what kind of borrowings you have to purchase. Or indeed repair. I know I told the Credit union one time I was purchasing a car, but instead I used the money to renovate (it was easier to get a car loan at the time). But whatever I told the CU, as far as my tax returns were I was able to write off the interest because I could demonstrate, if necessary, that the money was used to pay for renovations.I thought you weren't allowed to use personal loans towards house purchases?
Further to this, once his bank finds out he has another property they might want instead a lien on this. Meaning legals, property in both names etc, which takes time.Another option is would your own bank let you remortgage your home. If the money is secured on that home it can still be written off for tax on the rental, as long as you are able to show it's for repaying the 3 loans for the rental purchase.
Is it bad, well yes and no. Our first house purchase I ran up three made up CU loans consecutively in order to build up my credit so that I could borrow a serious amount to get us over the line on a future house purchase. So I borrowed for the stamp duty.Why not?
It's a bad idea, but there's nothing to prevent it.
I thought that this was an interesting idea and worth crunching the numbers.Sell it to someone and buy it back later with enough time to get mortgage without the complicated short term debt story.