If I pay cash for a rental property can I later obtain a mortgage and deduct the Interest on the Loan
Hi, @PetersonDavidW, and welcome to the community! The answer is an absolute maybe.
If you have decent scores and income, you likely can get a mortgage. Whether you can deduct the interest is another story. The standard deduction is now $12,200 for single people and $24,400 for married couples filing jointly. All your itemized deductions, including your mortgage interest, would have to be greater than your standard deduction to get any benefit from a mortgage.
Even then, it’s probably not worth it. Keep in mind that if your income tax bracket is, say, 22%, you’re getting at most 22 cents back for every dollar in interest you pay. You wouldn’t hand someone a dollar, get two dimes and two pennies back, and think you made a good exchange. Yet that’s what people do when they take out a mortgage only for the tax break.
Hope that helps and please let us know if you have any follow-up questions!