Thank you everyone for the reply - I agree with what you, dandarc and GilesMM mentioned. I will document intensively and likely also check with an accountant.
The saving is significant - 2% equal almost 20.000 USD per year in this case. It might be prudent to call a CPA for this, however, I have had bad experience with Tax Advisers, e.g. I have had an adviser once who told me the Backdoor Roth IRA and the Mega Backdoor Roth IRA should not be used...
If I nevertheless go that route I will circle back and post in case something arises.
With Best regards,
Jacob
So I think problem to be aware of here is that a qualified mortgage's interest may be partly deductible on Schedule E and then if Section 280A applies (which is does if you're using the property personally at all), also partly deductible on Schedule A. E.g., $70K of home mortgage interest might show up as $35K interest expense on Schedule E (or C) and $35K of mortgage interest on Schedule A.
In comparison, $50K of margin interest, split the same way, maybe produces a $25K Schedule E (or C) deduction... but it'll produce no mortgage interest deduction.
This may not matter. But it'd be something to consider.
Note: This blog post may help you refine your thinking about Section 280A:
https://evergreensmallbusiness.com/vacation-home-rental-tax-traps/BTW regarding the Roth and MBDR... To defend the tax accountants here, I see dozens of tax returns every year where the taxpayer uses Roth accounts or makes Roth conversions and it's the wrong choice. Most people can't do the math required or don't want to learn the accounting. They just hear the sirens singing "no taxes at withdrawal" and assume that means its a good deal. The so-called wealth advisors often contribute to this circus by talking up the idea as if it's the best thing since sliced bread. Part of the value that justifies their 1% or whatever fee.
Note: I've been playing with JavaScript and ChatGPT and adding calculators to some of my blog posts. Here's one that lets people calculator whether they end up with more money using a traditional or a Roth account:
https://evergreensmallbusiness.com/roth-calculator/At the bottom of the calculator's web page, some links point to more conceptual blogs that explain why Roth's usually don't deliver the optimal outcome.