Interest on your residence is deductible if you itemize your deductions. This fact is generally known, but what about interest on your second mortgage? What if you used your residence as security to purchase a rental property, loan money to a business, or to purchase a second residence?
There are also tax rules on deducting investment interest, business interest, and real estate loan interest.
Tip: Keep track of your loan documents and disbursements and be able to explain how the borrowed money was used.