How to proceed / decide regarding financing?

I would probably mortgage the rented property and use the money plus equity to build my own house.

The advantage is that the loan interest can then be offset against the rental income, thus saving taxes.
Here, a tax advisor is indeed the right contact person.

That is 100% wrong. If you want to claim interest for tax purposes, the loan taken out must also be used for a project with which you want to generate income.
You can mortgage the rented property to get a better interest rate for private house construction, but the interest is not deductible because the money is spent for private purposes.

Hello

this is my first post and I would like to hear your opinion/suggestion.
The situation is as follows:
47, 43 years old, married, 2 children 12/10, both employed at 50%, net about 3000 + child benefit + 2700 cold rent income (inherited house), existing land and equity about 1.1 million. Expenses currently about 1500 and we want to build soon and leave the big city to move to the countryside. Our house will cost about 850 thousand including everything and the land is available. Our house bank would very much like to talk to us and will probably offer us something. My wife and I are still considering which direction we should take and we thought about the 2 options.

1. pay everything in cash and thus be debt-free and spread the remaining capital into stocks and funds or

2. part equity and part financing and the rest in stocks etc.

For option 2, the question arises: how much equity/financing makes sense and for how long.
How would you proceed, what would be your approach in this situation.

Thank you very much and best regards