Refinance interest from paid off property

[#1]

Hello, I have a question, is I pay off my mortgage for my current property, in the future, if I use this property to get mortatge from bank again, can the interest be used for deduction? Say if this property generates rental income of 20k and the interest is 10k and depreciation is 5k, how much tax do I need to pay?

Thank you!

[#2 · Accepted solution]

When you borrow money, the interest is only deductible if the funds are used for an income producing purpose.

If your rental property is used as security for a loan to buy your family home (without an inome producing purpose), the interest would not be deductible.

Even if you used the funds for an income producing purpose e.g. to buy shares, the interest deduction would be claimed against the dividend income rather than the rental income.

[#3]

Thank you!