[net.taxes] 2 houses

mhb@magic.DEC.COM (Marc Brown) (09/26/86)

Suppose I own house A costing 100K with a 95K mortgage, and it is being
  used as rental property. It is now worth 200K.  I live in house B
  costing 250K with a 225K mortgage (and worth 250K). For the purpose
  of writing off the interest on our car and college loans, 
  I plan to take out a equity loan for 20K. However, because house B
  has no equity to speak of, the loan is written against house A. 

QUESTION 1: Does paying off a college loan count as "educational"?
  If so, why should I need to go to the hassle of taking out a loan
  against the house in the first place?

QUESTION 2: Supposing all 20K were used for the car loan (well, let's say
  a car, a Cessna, and a month for eating for 2 in Paris), how much would
  be writeoffable? Clearly 5K (or a bit more since the 100K house has
  some "improvements"). Can the remaining 15K be used against the 25K 
  equity in house B (purchase price less mortgage)? Or would a second
  loan against house B be needed? (This would be nearly impossible, 
  since the original mortgage is so close to the value.)