Second Home
Interest Deductions
Second Home
Deduction
Click Links Above To Order HR Block TaxCut Software, Get Started Now!
Second Home Interest is
deductible
IRS Topic 505 -
Interest Expense
Second Home Deductions
If you take out a mortgage to buy,
construct or substantially improve a
second home, the interest is deductible
if you itemize deductions.
Your
deduction may be limited if the mortgage
exceeds the fair market value of the
home or if the mortgages on your main
home and your second home exceed $1
million ($500,000 if you're Married
Filing Separately). These limits do not
apply to mortgages taken out before Oct.
14, 1987 (called grandfathered debt),
but grandfathered debt reduces the $1
million and $500,000 limits.
A second home can be a
-
House,
-
Condominium,
-
Cooperative,
-
Mobile home,
-
House trailer,
-
Recreation Vehicle
-
Boat
They must have sleeping,
cooking and toilet facilities. If you own more than 2 homes, you
must choose which home other than your
main home to treat as the second home.
If you take out a home equity loan or
line of credit on your second home, the
interest is fully deductible unless the
mortgage exceeds the fair market value
of the home reduced by the amount of the
mortgages, or if the
mortgages of this type on your main home
and second home exceed $100,000 ($50,000
if Married Filing Separately).
Real estate taxes and points you pay
over the life of a mortgage to acquire a
second home are deductible if you
itemize deductions.
Renting Your Second Home
If you use the home as a residence and
rent it for less than 15 days during the
year, you don't have to report the
rental income. You may not
deduct any expenses attributable to the
rental, but you may deduct interest and
taxes if you itemize your deductions.
Selling Your Second Home
If you sell your second home, the gain
will be taxed as capital gain, long-term
if you owned it for more than a year and
short-term if you owned it 1 year or
less. A loss on the sale can't be
deducted. If the second home was rented
for profit, gain generally is taxed as
capital gain and a loss can be deducted.
TaxReturnRelief.com US tax help: AL, AK, AZ, AR, CA, CO, CT, DE, DC, FL, GA, H, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NV, New NH, New NJ, NM, NY, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY
|
