🦍 OBBB Play: Deduct More Interest with Smarter Financing — The Rental Property Rule Landlords Can’t Miss in 2026
Landlords: Ready for a tax rule that actually makes sense?
The OBBB just handed you a banana with Section 70501 — and it’s about to unlock smarter, bigger deductions for your rental properties starting in 2026.
💡 The Big Change: It’s Not About Which Property — It’s How You Use the Money
Old rule (2025 and before):
You could only deduct interest on a loan if it was secured by the same property you were improving or buying.
(Talk about tying your hands…)
New rule (2026 and beyond):
Deduct the interest as long as the money is used for rental purposes — no matter which property secures the loan.
This is the “traced debt” rule finally making its way to landlords!
🦍 Real-World Example
Rental A needs a $100K ADU (Accessory Dwelling Unit)
Rental C has $200K in untapped equity and a great HELOC rate
Old rule: If you pulled equity from Rental C to upgrade Rental A, interest probably wasn’t deductible.
New rule (2026): Deduct every penny of that interest — as long as you trace the funds to Rental A’s improvement.
🛠️ New Strategies for Smarter Landlords
Tap the best equity:
Pull from whichever rental has the lowest rate — use the cash where it’s needed, and still get the deduction.Consolidate loans:
Bundle projects under one HELOC or refi — Hedgi tracks it all so you don’t lose a dime at tax time.Time your big projects:
If you’re planning ADUs, green upgrades, or major renos, consider waiting for 2026 — when the deduction rules get a lot friendlier.Trace and tag:
Keep records clear — the deduction follows the use of funds, not just where the loan sits. Hedgi AI will tag every step and create audit-proof records.
âś… What Counts as Deductible?
Buying a new rental property
Improvements, renos, repairs
Maintenance and refinance of old rental loans
What doesn’t count:
Personal use
Primary residence
Mixed-use funds (watch out — trace carefully!)
🦔 How Hedgi Makes It Easy
Tags and traces every loan and project use
Preps your books for audit-ready deductions
Models the best financing moves before you pull the trigger
Keeps you out of IRS monkey business
🎯 Bottom Line
Starting in 2026, landlords have way more flexibility — and the chance to unlock bigger, smarter deductions with the money they control.
Let Hedgi keep your records sharp and help you make every dollar work harder.
Want to model your next project, or get your books ready for traced debt?
Sign up for the waitlist — and make 2026 the year you go full gorilla on tax savings.