Have a technical question here that I want some assurance. Have spoken to my accountant on this but his answer was less than comforting thus hoping some one has clear answer on this.
1. I had a mortgage free home with no investment property(IP)
2. Mortgaged home to buy IP#1 in 2010
3. Re-mortgaged home(to arrange revolving facility) to buy IP#2 in 2011
4. Later again using revolving facility, bought IP#3 in 2011
5. Shortly after IP #3 was purchased I changed mind and moved into IP#3 and rented out home instead. So IP#3 had never been rented out.
My accountant told me interest for mortgage on 'home' was originally deductible as the mortgage was raised to buy IPs thus a business expense.
- Now with the situation that I have flipped 'home' with IP#3 and IP#3 has now become a 'home', would the interest on IP# 3 still deductible? Given the interests over 'home' and IPs was all deductible?
- Difference on mortgage amount between original 'home' and IP#3 is around $40k. Does that mean I would not be able to claim interest on this $40k in this instance if so.