joanmcq Posted April 8, 2022 Report Share Posted April 8, 2022 I have a client that refi'd a rental property for over a million dollars. Cash out was $483,000. I haven't asked him yet what he did with the money (probably spent it on another rental property). How do I account for this? Quote Link to comment Share on other sites More sharing options...
Slippery Pencil Posted April 9, 2022 Report Share Posted April 9, 2022 You can't until you find out what he did with it. 1 Quote Link to comment Share on other sites More sharing options...
grandmabee Posted April 9, 2022 Report Share Posted April 9, 2022 yes, interest tracing. Quote Link to comment Share on other sites More sharing options...
joanmcq Posted April 9, 2022 Author Report Share Posted April 9, 2022 He spent it on all the rentals (he has 3). I have no idea how I would interest trace. I mentioned that he shouldn't use it for the other two, but haven't heard back yet. He still has some of the money, maybe most of it. I did mention that NONE should be spent on personal things of any sort. Quote Link to comment Share on other sites More sharing options...
Lee B Posted April 9, 2022 Report Share Posted April 9, 2022 You just follow the dollars and allocate the interest accordingly, some may go to other rental properties. Some may go to "investment Interest." You don't need to tell your client "not to spend on personal stuff." Anything spent on personal ends up being allocated to "nondeductible interest." 1 Quote Link to comment Share on other sites More sharing options...
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