calculate effective interest rate on LOC for US rental

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aniagara
Posts: 13
Joined: Mon Nov 08, 2010 11:22 am

calculate effective interest rate on LOC for US rental

Post by aniagara »

Hello! Thank you to all the experts here for any help. I can't figure out where to start to figure out the following:

I have a rental house in the states. I'm dual but live and work in Ontario. I have the highest marginal tax rate (47? 49?). The interest I pay on the LOC that paid for the house decreases the income from the rental along with property taxes, insurance, etc. (As I'm sure you know well.)

I'm trying to figure out exactly what this interest "saves", so I can know the effective interest rate on my LOC when tax is considered.

Thank you!
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JGCA
Posts: 754
Joined: Thu Nov 18, 2010 3:05 pm
Location: Montreal, QC Canada

Post by JGCA »

Be careful teh fact that you are trying to write off interest on a LOC vs a mortgage secured by the rental property may be dissallowed by IRS. The savings is merely your marginal rate since taxable income is decreased by the amount if allowed.
JG
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