Before you paid the new rental property, the interest of your home mortgage up to 750K is deductable in itemized deduction.
After you paid the new rental property, only the interest for the amount for new rental property is deductible from the rental income.
For example, you took out a 500K home equity loan at 6% a year. That is approx. $30,000 a year in interest.
Before you paid for the new rental property, the $30,000 can be deducted as itemized deduction. Because it is more than the standard deuduction amount of 25900
Let's say you spend $400K to buy a new rental property. Only the interest of that $400K (6% x 400K = 24000) is deductible against the rental income. The interest of the remining $100K could be deducted from the itemized deduction, however it won't carry you over the standard deudction amount of 25900.
